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

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  • Meng-Shiuh Chang
  • Teng-Yuan Hu
  • Ching-Yuan Lin

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.

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  • Meng-Shiuh Chang & Teng-Yuan Hu & Ching-Yuan Lin, 2016. "Variation in Engel's law across quantiles in Taiwan: toward an alternative concept of near poverty line," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 21(1), pages 103-115, January.
    • Handle: RePEc:taf:rjapxx:v:21:y:2016:i:1:p:103-115
    DOI: 10.1080/13547860.2015.1068599
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    1. Jayasinghe, Maneka & Chai, Andreas & Ratnasiri, Shyama & Smith, Christine, 2017. "The power of the vegetable patch: How home-grown food helps large rural households achieve economies of scale & escape poverty," Food Policy, Elsevier, vol. 73(C), pages 62-74.

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