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Family-Type Subsistence Incomes

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Abstract

Different family types may have a fixed flow of consumption costs, related to subsistence needs. We use a survey method in order to identify and estimate such a fixed component of spending for different families. Our method involves making direct questions about the linkup between aggregate disposable family income and well-being for different family types. Conducting our survey in six countries, Germany, France, Cyprus, China, India and Botswana, we provide evidence that fixed costs of consumption are embedded in welfare evaluations of respondents. More precisely, we find that the formalized relationship between welfare-retaining aggregate family incomes across different family types, suggested by Donaldson and Pendakur (2005) and termed “Generalized Absolute Equivalence Scale Exactness,” is prevalent and robust in our data. We use this relationship to identify subsistence needs of different family types and to calculate income inequality.

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  • Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2006. "Family-Type Subsistence Incomes," Vienna Economics Papers vie0602, University of Vienna, Department of Economics.
    • Handle: RePEc:vie:viennp:vie0602
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    1. Koulovatianos, Christos & Schroder, Carsten & Schmidt, Ulrich, 2005. "On the income dependence of equivalence scales," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 967-996, June.
    2. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Properties of Equivalence Scales in Different Countries," Journal of Economics, Springer, vol. 86(1), pages 19-27, October.
    3. Donaldson, David & Pendakur, Krishna, 2006. "The Identification of Fixed Costs From Consumer Behavior," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 255-265, July.
    4. Pitt, Mark M & Rosenzweig, Mark R & Hassan, Md Nazmul, 1990. "Productivity, Health, and Inequality in the Intrahousehold Distribution of Food in Low-Income Countries," American Economic Review, American Economic Association, vol. 80(5), pages 1139-1156, December.
    5. Donaldson, D. & Pendakur, K., 1999. "Equivalent-Income Functions and Income-Dependent Equivalence Scales," Discussion Papers dp99-8, Department of Economics, Simon Fraser University.
    6. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Properties of Equivalence Scales in Different Countries," Journal of Economics, Springer, vol. 86(1), pages 19-27, October.
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    1. Koulovatianos, Christos & Schröder, Carsten & Schmidt, Ulrich, 2008. "Confronting the Robinson Crusoe paradigm with household-size heterogeneity," CFS Working Paper Series 2008/24, Center for Financial Studies (CFS).
    2. Antony, Jürgen & Klarl, Torben, 2019. "Non-renewable resources, subsistence consumption, and Hartwick's investment rule," Resource and Energy Economics, Elsevier, vol. 55(C), pages 124-142.
    3. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2010. "Confronting the Representative Consumer with Household-Size Heterogeneity," Discussion Papers of DIW Berlin 1056, DIW Berlin, German Institute for Economic Research.
    4. Garcia-Diaz Rocio, 2012. "Demand-Based Cost-of-Children Estimates and Child Poverty," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-32, January.

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    More about this item

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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