Estimates of semiparametric equivalence scales



Within the semiparametric framework introduced by Pendakur (1999) we introduce a new loss function to estimate equivalence scales. This loss function uses all available information from the total expenditures of both the reference and nonreference households and as such it produces more reliable estimates. Using Canadian family expenditure data for 1996 we apply this loss function to obtain equivalence scale estimates for a variety of expenditure share categories such as food, fuel and clothing. Copyright © 2006 John Wiley & Sons, Ltd.