Subjective poverty equivalence scales for Euro Zone countries

Ismael Ahamdanech-Zarco, John A. Bishop (), Andrew Grodner and Haiyong Liu
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Ismael Ahamdanech-Zarco: Department of Economics, East Carolina University
John A. Bishop: Department of Economics, East Carolina University
Andrew Grodner: Department of Economics, East Carolina University
Haiyong Liu: Department of Economics, East Carolina University

No 233, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: While the idea behind subjective equivalence scales is generally attractive, subjective scales have been plagued by problems of inconsistency. We address this problem with new European Income and Living Conditions (SILC) datasets that are much larger in size than those available to previous researchers. We estimate subjective equivalence scales for the whole Euro Zone as well as its individual constituent countries. Our subjective scales increase consistently with household size. More importantly, we find that adding the first child is more costly than adding a third adult and that the marginal cost of children declines. Comparing modified OECD scale poverty rates to our subjective poverty rates (holding the overall poverty rate constant) we find that the subjective scales ‘redistribute poverty’ away from larger to smaller households.

Keywords: poverty; equivalence scales; subjective method; eurozone. (search for similar items in EconPapers)
JEL-codes: I32 J13 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2011-233

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