Basic needs fulfilment

Abstract

The present chapter will examine the impact of income (in)equality on the satisfaction of basic needs. It is usually assumed that an equalization of incomes has a positive influence on the fulfilment of basic needs. But empirical studies that tested this relationship have obtained rather divergent results, and seem to suggest that the satisfaction of basic needs is independent of the degree of equality in the income distribution. The next section will summarize these empirical studies and will briefly dicuss the theoretical arguments that are given. After that, section three will examine in more detail the theory behind the relationship. The strictly concave shape of Engel curves for necessities will be used to argue that an equalization of household incomes has a positive impact on the average level of basic needs fulfilment. Section four presents the results an empirical test of the relationship for the cross-national data set of 54 countries. The specification of the regression equations is derived from the analysis in section three. In addition, section four will examine whether the mixed results of previous empirical studies on the subject are caused by errors in the specification of the regression equations, in particular the specification that is used for the average income variable. Finally, section five will summarize the results of this chapter.