Reference : On the Income Dependence of Equivalence Scales
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On the Income Dependence of Equivalence Scales
Koulovatianos, Christos mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Schroder, Carsten [> >]
Schmidt, Ulrich [> >]
University of Cyprus Department of Economics
[en] equivalence scales; survey method; independence of base
[en] We suggest a simple survey method for obtaining direct subjective estimates of equivalence scales, also appropriate for testing whether equivalence scales depend on reference-household income. We implement our approach in two countries, Germany and France. In both countries independence of base is rejected. In particular, we find that equivalence scales depend negatively on reference income, an indication of increasing economies of scale in household consumption as living standards go up. Our estimation method is non-parametric, and it allows us to test generalized equivalence-scale exactness, which is not rejected in any of our samples.
University of Cyprus Working Papers in Economics

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