A CROSS‐COUNTRY STUDY OF EQUIVALENCE SCALES AND EXPENDITURE INEQUALITY ON UNIT RECORD HOUSEHOLD BUDGET DATA

Abstract

Inequality comparisons require equivalence scales to account for differences in household size and composition. The multiplicity of equivalence scale models makes the sensitivity of the inequality calculations to the scale used a significant policy issue. Such an investigation based on unit records of two adult households from Italy, Australia, South Africa, Thailand, Peru, Philippines, India and Tanzania was our principal motivation. The equivalence scale varies across countries and between different types of children. Inequality rankings of countries, though not the inequality decomposition between households of different composition, are robust to the equivalence scale used.