From the Main Determinants of Self‐Declared Minimum Income to the Measure of Sub‐National Purchasing Power Parity

Abstract

Exploiting a French living condition survey from 2008 to 2015, this paper documents the main determinants of self‐declared minimum income necessary to achieve decent living. Declared minimum income is strongly related to actual income. Isolating this relationship, it is possible to highlight the other determinants: family composition, housing tenure, socioprofessional status, region, and degree of urbanization. A sub‐national measure of purchasing power parity is then developed. From a macroeconomic point of view, it leads to lower Gini index and higher rate of poverty in PPP terms than in nominal terms. However, these changes are heterogeneous, with increased poverty concentration around Paris, Mediterranean coast, and in the North. It is worth noting that the North, the poorest region in nominal terms, presents relatively low price of housing but a relatively high cost of living.