The sensitivity of income inequality to choice of equivalence scales
Journal article, Peer reviewed
Permanent lenke
http://hdl.handle.net/11250/178028Utgivelsesdato
1998Metadata
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Originalversjon
Review of Income and Wealth, Vol. 44, No. 4, 565-569Sammendrag
To account for the fact that a household's needs depend on its size and composition most studies on income inequality adjust the observed household incomes by equivalence scales. However, since the rationale for choosing a specific scale is rather vague the importance of testing the sensitivity of income inequality estimates to choice of equivalence scales has long been acknowledged. The sensitivity studies in the literature restrict to equivalence scales that do not depend on the income level of the reference household which means that the effect of a rise in the household size on the scale rate does not depend on whether the household is poor or rich. By using Norwegian micro-data it is shown that the introduction of an income-dependent scale produces results that are in conflict with the widespread view of robustness of results to choice of equivalence scales.
Keywords: Distribution of income, income dependent equivalent scales, the Gini coefficient
Beskrivelse
This is the pre-peer reviewed version of the following article: Journal of Income and Wealth, Vol.4, No. 4, 565-569, which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4991.1998.tb00299.x/pdf