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A platform for research: civil engineering, architecture and urbanism
How does household production affect measured income inequality?
Abstract Theory predicts that lower-income households will produce more goods at home. Thus extended income, which includes household production, should be more equally distributed than money income. Previous studies have confirmed the greater equality of extended income and speculated that the result is due to the weak correlation between money income and household production. We also confirm this result and identify the true reason. We show that the weak correlation cannot be the explanation and that virtually all of the difference in measured inequality between the two measures is due to the addition of a large constant—the average value of household production—to money income.
How does household production affect measured income inequality?
Abstract Theory predicts that lower-income households will produce more goods at home. Thus extended income, which includes household production, should be more equally distributed than money income. Previous studies have confirmed the greater equality of extended income and speculated that the result is due to the weak correlation between money income and household production. We also confirm this result and identify the true reason. We show that the weak correlation cannot be the explanation and that virtually all of the difference in measured inequality between the two measures is due to the addition of a large constant—the average value of household production—to money income.
How does household production affect measured income inequality?
Frazis, Harley (author) / Stewart, Jay (author)
2009
Article (Journal)
English
How does household production affect measured income inequality?
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