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

19 Pages Posted: 16 Nov 2018

See all articles by François Gardes

François Gardes

Université Paris I Panthéon-Sorbonne

Christophe Starzec

Université Paris I Panthéon-Sorbonne

Date Written: December 2018

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

Suggested Citation

Gardes, François and Starzec, Christophe, A Restatement of Equivalence Scales Using Time and Monetary Expenditures Combined with Individual Prices (December 2018). Review of Income and Wealth, Vol. 64, Issue 4, pp. 961-979, 2018. Available at SSRN: https://ssrn.com/abstract=3285383 or http://dx.doi.org/10.1111/roiw.12302

François Gardes (Contact Author)

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

Christophe Starzec

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

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