A Restatement of Equivalence Scales Using Time and Monetary Expenditures Combined with Individual Prices

François Gardes () and Christophe Starzec ()
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François Gardes: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Christophe Starzec: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

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Abstract: In the classic equivalence scale estimations based on micro-econometric analysis, only the costs of market consumption are taken into account. We define the concept of full cost equivalence scales as integrating both monetary and the time use costs and measure it on matched French family budget and time use surveys. These data allow us to define full prices and to estimate equivalence scales conditional to possible substitution through prices. The results show higher full scales than the monetary for the preferred Independent of a Base specification. Relative to the cost of the second adult, the full child cost is also larger than the monetary for matching estimators and the Prais-Houthakker model. It shows households' capacity to substitute domestic production to market activities. In consequence the measures of income inequality diminish considerably using full income and full equivalence scales.

Keywords: cost of children; domestic production; equivalence scale; inequality; time allocation (search for similar items in EconPapers)
Date: 2018-12
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Citations: View citations in EconPapers (8)

Published in Review of Income and Wealth, 2018, 64 (4), pp.961-979. ⟨10.1111/roiw.12302⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-01478056

DOI: 10.1111/roiw.12302

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