Computing real income at NUTS 3 regions

Marek Radvansky and Ladislav Fuchs

No 4504, EcoMod2012 from EcoMod

Abstract: General analyses of household income at expenditure side as well as comparison of wage differences and mean net equalized income are mostly based on nominal comparisons. Regional indexes at regional level are not available at most European countries, so there is problem to estimate real wages and real income. At this paper we will try to estimate price indexes at regional level (NUTS 3) in Slovakia. These indexes will be based on alternative source of information, household accounts - the only homogenous source of data so far and continuously characterize the housekeeping of given social groups published by Slovak Statistical Office and structure of basket of consumer goods. Estimated consumption baskets of Slovak regions serve as the basis for calculation of regional price indices. There will be compared several methods of estimating price indexes and results will be compared and analysed. According to nominal comparisons, there are huge regional income disparities at Slovak regions (more than 33 % at income side), but we expect significantly lower level of disparities in real terms caused by price differences on both sides. There have been selected 5 different approaches to estimate regional price index based on structure of families in the regions, income levels, net mean equalized income, and structure of expenditures. Estimations are counted at statistical software SAS. Structure of income and expenditures was best fitted by three parameter log-log regression based on maximum likelihood method. This approach has not been applied yet to the selected problem. Correspondence of selected statistics was confirmed by Kolmogorov-Smirnov and Chi2 test. Preliminary results shows, that regional disparity, especially at wage and mean equalized income are significantly lower in real terms. All 5 approaches to estimate regional prices show similar results. Based on the results, we are convinced, that selected approach could be taken as a proxy for real regional price indices. This should be therefore taken into account by selecting adjusted regional policy. This paper supports effort to persuade statistical offices to start analysing regional price indexes.

Keywords: Slovakia; results are applicable to the most CEE countries; Regional modeling; Labor market issues (search for similar items in EconPapers)
Date: 2012-07-01
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