Review of Economics of the Household

, Volume 16, Issue 2, pp 189–227 | Cite as

Equivalence scales for extended income in the U.S

Article

Abstract

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.

JEL Codes

J1 I3 E2 

Keywords

Equivalence scales Non-market work Extended income 

Notes

Acknowledgements

We gratefully acknowledge the comments and criticisms of Lars Osberg and other participants at the Conference of the International Association for Research on Income and Wealth in Rotterdam, Netherlands, August, 2014, where a preliminary version of this paper was presented. We also received useful feedback from David Johnson and from participants in the International Association for Feminist Economics conference in Berlin, Germany, July 2015.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no competing interests.

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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Director, Program on Gender and Care WorkPolitical Economy Research Institute, University of Massachusetts AmherstAmherstUSA
  2. 2.Department of EconomicsUniversity of Massachusetts AmherstAmherstUSA
  3. 3.Centre for Time Use Research, University of OxfordOxfordUK

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