Equivalence Scale Relativities Revisited

Abstract

Recent studies have assessed the impact of choice of equivalence scale on economists' measurement of the equivalent income distribution. One particular study (Coulter, Cowell and Jenkins (1992)) has found that equivalence scales used in the UK official statistics ‘provide lower estimates of the extent of inequality and poverty than do other scales'. In this paper we demonstrate that these kind of results are dependent on the particular year of data and equivalence scale specification that is used and are not properties intrinsic to particular methodologies. Results are also not robust to the use of more recent UK microeconomic data.