Ruhr Economic Papers

Ruhr Economic Papers #526

A Nonparametric Partially Identified Estimator for Equivalence Scales

by Christian Dudel

RUB, 11/2014, 11 S./p., 8 Euro, ISBN 978-3-86788-601-7 DOI: 10.4419/86788601



Methods for estimating equivalence scales usually rely on rather strong identifying assumptions. This paper considers a partially identified estimator for equivalence scales derived from the potential outcomes framework and using nonparametric methods for estimation, which requires only mild assumptions. Instead of point estimates, the method yields only lower and upper bounds of equivalence scales. Results of an analysis using German expenditure data show that the range implied by these bounds is rather wide, but can be reduced using additional covariates.

JEL-Classification: C14, D12

Keywords: Household equivalence scale; partial identification; matching estimator