Equivalence scales for extended income in the U.S

Nancy Folbre (), Marta Murray-Close () and Jooyeoun Suh ()
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Nancy Folbre: Political Economy Research Institute, University of Massachusetts Amherst
Marta Murray-Close: University of Massachusetts Amherst
Jooyeoun Suh: Centre for Time Use Research, University of Oxford

Review of Economics of the Household, 2018, vol. 16, issue 2, No 1, 189-227

Abstract: Abstract Estimates of extended household income (the sum of market income and the imputed value of non-market household production) should adjust for differences in household size and composition using equivalence scales. However, the equivalence parameters traditionally applied to market income do not plausibly apply to non-market income. Economies of scale in the relationship between living standards and household income are greater for non-market income from household production than market income, and the costs of children relative to adults are higher in household production time than in cash expenditures. Also, the presence of a full-time family caregiver significantly reduces cash expenditures on child care. This paper proposes equivalence scales that can be separately applied to the components of extended income, and demonstrates their empirical relevance with pooled data from the American Time Use Survey for 2010–2014. The proposed parameters significantly alter the relative contribution of non-market income to extended income and modify comparisons of extended income across different family household types, with particularly significant implications for the relative well-being of those with and without full-time family caregivers.

Keywords: Equivalence scales; Non-market work; Extended income; J1; I3; E2 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s11150-017-9387-8

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