Subjective Equivalence Scales Using EU-SILC Panel Data for Poland, the Czech Republic and Hungary

Leszek Morawski, Małgorzata Kalbarczyk and Rafał Miśta ()
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Rafał Miśta: Robert B. Zajonc Institute for Social Studies, University of Warsaw

Acta Oeconomica, 2017, vol. 67, issue 4, 585-604

Abstract: Equivalence scales are commonly employed in income analysis to compare the wealth of households of various compositions (e.g., 0-child, 1-child). The choice of weights for this type of analysis is not self-evident. In this paper, subjective equivalence scales for households in Poland, the Czech Republic, and Hungary are estimated. We use longitudinal EU-SILC data for 2005–2012 following the approach of Goedhart et al. (1977) as employed by Bishop et al. (2014). The use of longitudinal data shows that previous results on the subjective minimum income that were based on the OLS estimates for cross-section data overestimated the impact from current income and underestimated the role of economies of scale. Subjective equivalence scales imply a decreasing marginal cost of children in the three countries, which makes them distinct from the OECD scale. The marginal cost of a first child is similar to the values assumed in the OECD scale, but the cost of a second child is much lower.

Keywords: subjective equivalence scales; minimum income; EU-SILC; panel data; Poland; Czech Republic; Hungary (search for similar items in EconPapers)
JEL-codes: D63 I32 P46 (search for similar items in EconPapers)
Date: 2017
Note: This work was supported by the Polish National Science Centre (NCN) under Grant No. DEC-2013/09/B/HS4/01923.
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