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Equivalence Scales Based on Revealed Preference Consumption Expenditure Microdata - The Case of West Germany

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  • Merz, Joachim
  • Faik, Jürgen

Abstract

Equivalence scales are a prerequisite for any economic well-being comparison with measures on income distribution, inequality and poverty. This paper provides equivalence scales based on revealed preference consumption microdata for West Germany 1983. It is a part of a joint US and German research project comparing equivalence scales with consistent methods and similar microdata bases, recent income and consumption surveys of both countries. We concentrate on a single equation expenditure method with different Engel approaches as well as on a complete demand system approach. The complete demand system approach provides true, constant utility based equivalence scales and is specified by an extended linear expenditure system (ELES). While the Engel methods traditionally focus on food expenditures, the multiple equation expenditure system takes into account a full market basket with all its interdependencies and relative prices. Our equivalence scale study for West Germany based on actual available individual consumption expenditure data shows a variety of interesting results with regard to different goods and services baskets as well as to different household composition effects including the situation of the elderly, of the families with married couples and single mothers, and the cost of children. Our consumption results finally are compared to further consumption, expert, and subjective based equivalence scales.

Suggested Citation

  • Merz, Joachim & Faik, Jürgen, 1994. "Equivalence Scales Based on Revealed Preference Consumption Expenditure Microdata - The Case of West Germany," MPRA Paper 16297, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:16297
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    References listed on IDEAS

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    11. McClements, L. D., 1977. "Equivalence scales for children," Journal of Public Economics, Elsevier, vol. 8(2), pages 191-210, October.
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    Cited by:

    1. Joachim Merz, 1993. "Statistik und Freie Berufe im Rahmen einer empirischen Wirtschafts- und Sozialforschung," FFB-Discussionpaper 04, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    2. Merz Joachim, 2003. "Was fehlt in der EVS?. Eine Verteilungsanalyse hoher Einkommen mit der verknüpften Einkommensteuerstatistik für Selbständige und abhängig Beschäftigte / What is Missing in the EVS?. A Distributional A," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(1), pages 58-90, February.
    3. Christian Dudel & Notburga Ott & Martin Werding, 2013. "Maintaining One's Living Standard at Old Age - What Does That Mean?: Evidence Using Panel Data from Germany," SOEPpapers on Multidisciplinary Panel Data Research 563, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Leonardo Becchetti & Elena Giachin Ricca & Alessandra Pelloni, 2009. "Children, happiness and taxation," Econometica Working Papers wp12, Econometica.
    5. Fachinger, Uwe & Faik, Jürgen, 2010. "Ausgabenanalysen für Deutschland und Niedersachsen – Berechnungsergebnisse auf Basis der Einkommens‐ und Verbrauchsstichprobe 2003 [Analysis of expenditures for Germany and Lower Saxony - Empirical," MPRA Paper 23269, University Library of Munich, Germany.
    6. Joachim Merz, 2002. "Reichtum in Deutschland: Hohe Einkommen, ihre Struktur und Verteilung - Eine Mikroanalyse mit der Einkommensteuerstatistik für Selbständige und abhängig Beschäftigte," FFB-Discussionpaper 36, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    7. Ulrich Widmaier & Hiltrud Niggemann & Joachim Merz, 1994. "What makes the Difference between Unsuccessful and Successful Firms in the German Mechanical Engineering Industry?," FFB-Discussionpaper 11, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    8. Martina Mysíková & Tomáš Želinský & Michaela Jirková & Jiří Večerník, 2021. "Equivalence Scale and Income Poverty: Two Approaches to Estimate Country-specific Scale for the Czech Republic," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 156(1), pages 21-45, July.
    9. Ma. Rebecca J. Valenzuela, 1996. "Engel Scales for Australia, the Philippines and Thailand: A Comparative Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(2), pages 189-198, April.
    10. Merz, Joachim, 1995. "MICSIM : Concept, Developments and Applications of a PC-Microsimulation Model for Research and Teaching," MPRA Paper 16029, University Library of Munich, Germany.
    11. Alois Guger & Reiner Buchegger & Hedwig Lutz & Christine Mayrhuber & Michael Wüger, 2003. "Schätzung der direkten und indirekten Kinderkosten," WIFO Studies, WIFO, number 24078, March.
    12. Merz, Joachim, 2002. "Reichtum in Deutschland: Hohe Einkommen, ihre Struktur und Verteilung," MPRA Paper 5992, University Library of Munich, Germany.
    13. Christian Dudel & Jan Marvin Garbuszus & Julian Schmied, 2021. "Assessing differences in household needs: a comparison of approaches for the estimation of equivalence scales using German expenditure data," Empirical Economics, Springer, vol. 60(4), pages 1629-1659, April.
    14. Christian Dudel & Notburga Ott & Martin Werding, 2016. "Maintaining one’s living standard at old age: What does that mean?," Empirical Economics, Springer, vol. 51(3), pages 1261-1279, November.
    15. Joachim Merz, 2001. "Was fehlt in der EVS ? Eine Verteilungsanalyse hoher Einkommen mit der verknüpften Einkommensteuerstatistik für Selbständige und abhängig Beschäftigte," FFB-Discussionpaper 30, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    16. Nicola Fuchs-Schündeln, 2008. "The Response of Household Saving to the Large Shock of German Reunification," Working Papers, Center for Retirement Research at Boston College wp2008-21, Center for Retirement Research, revised Dec 2008.

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    More about this item

    Keywords

    alternative equivalence scales; Germany; USA; distribution of income; inequality; poverty;
    All these keywords.

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D30 - Microeconomics - - Distribution - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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