Income-(in)dependent equivalence scales and inequality measurement

DOI

Most equivalence scales that are applied in research on inequality do not depend on income, even though there is strong empirical evidence that equivalence scales are actually income-dependent. This paper explores the consistency of results derived from income-independent and income-dependent scales. We show that applying income-independent scales when income-dependent scales would be appropriate leads to violations of the transfer principle. Surprisingly, there are some exceptions, but these require unrealistic and strong assumptions. Thus, the use of income-dependent equivalence scales almost always leads to different assessments of inequality than the use of income-independent equivalence scales. Two examples illustrate our findings.

Identifier
DOI https://doi.org/10.15456/ger.2020289.101354
Metadata Access https://www.da-ra.de/oaip/oai?verb=GetRecord&metadataPrefix=oai_dc&identifier=oai:oai.da-ra.de:768114
Provenance
Creator Dudel, Christian; Garbuszus, Jan Marvin; Ott, Notburga; Werding, Martin
Publisher ZBW - Leibniz Informationszentrum Wirtschaft
Publication Year 2020
Rights Creative Commons Attribution 4.0 (CC-BY); Download
OpenAccess true
Contact ZBW - Leibniz Informationszentrum Wirtschaft
Representation
Language English
Resource Type Collection
Discipline Economics; Social and Behavioural Sciences