Equivalence scales for extended income in the U.S

Estimates of extended household income (the sum of market income and the imputed value of non-market household production) should adjust for differences in household size and composition using equivalence scales. However, the equivalence parameters traditionally applied to market income do not plaus...

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Bibliographic Details
Published inReview of economics of the household Vol. 16; no. 2; pp. 189 - 227
Main Authors Folbre, Nancy, Murray-Close, Marta, Suh, Jooyeoun
Format Journal Article
LanguageEnglish
Published New York Springer US 01.06.2018
Springer Nature B.V
Subjects
Caregivers
Child care
Children
Economic analysis
Economic theory
Economics
Economics and Finance
Economies of scale
Equivalence
Expenditures
Families & family life
Family income
Household size
Households
Income
Labor Economics
Microeconomics
Population Economics
Social Sciences
Standard of living
Time use
Well being
United States > US
Equivalence scales
I3
Extended income
Non-market work
E2
J1
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Summary:Estimates of extended household income (the sum of market income and the imputed value of non-market household production) should adjust for differences in household size and composition using equivalence scales. However, the equivalence parameters traditionally applied to market income do not plausibly apply to non-market income. Economies of scale in the relationship between living standards and household income are greater for non-market income from household production than market income, and the costs of children relative to adults are higher in household production time than in cash expenditures. Also, the presence of a full-time family caregiver significantly reduces cash expenditures on child care. This paper proposes equivalence scales that can be separately applied to the components of extended income, and demonstrates their empirical relevance with pooled data from the American Time Use Survey for 2010–2014. The proposed parameters significantly alter the relative contribution of non-market income to extended income and modify comparisons of extended income across different family household types, with particularly significant implications for the relative well-being of those with and without full-time family caregivers.
ISSN:1569-5239
1573-7152
DOI:10.1007/s11150-017-9387-8