Using Equivalence Scales as Spatial Deflators: Evidence in Inter-Household Welfare Regional Comparisons from Italian HBS Micro-Data

In inter-household welfare comparisons, equivalence scales have been traditionally used as a tool for making comparisons among households with different composition, as well as to assess the cost of additional household components, with focus on cost of children. No reference has been explicitly made to the time/space dimensions, except the time one implicit in the inter-temporal approach. No attention has been paid so far to a possible role of them in space framework. Based on previous works by the author and associate, this paper investigates the use of equivalence scales as inter-household income spatial deflators, through a geographically, socio-economically and demographically extended PS-GAIDS model named PGSEDS-GAIDS that allows to account not only for space, but also for social, economic and demographic variables other than number and age of additional components. By using the Italian Household Budget Survey micro-data base, evidence on Italian inter-regional household comparisons are obtained and discussed, showing that, despite several problems remain open and more than one remark can be made, it may be worth using equivalence scales in space domain.