Variation in Engel's law across quantiles in Taiwan: toward an alternative concept of near poverty line

Meng-Shiuh Chang, Teng-Yuan Hu and Ching-Yuan Lin

Journal of the Asia Pacific Economy, 2016, vol. 21, issue 1, 103-115

Abstract: In many countries, the definition of near poverty line is the given amount that is slightly above the poverty line, but the precise economic and statistical basis is unknown. In order to find a natural candidate of near poverty line, this paper employs robust quantile regression on a quadratic parametric model of Engel's law to investigate changes in curvature, signifying changes in taste or liquidity constraint, across food share quantiles. By analyzing thirty waves of the Survey of Family Income and Expenditure in Taiwan (1980–2009), it finds that the curvature systematically follows the ‘bifocal’ variation, indicating a perceptible break in consumption behavior. The threshold separating the two food consumption patterns provides a natural candidate of near poverty line of Taiwan.

Date: 2016
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DOI: 10.1080/13547860.2015.1068599

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