Review of Economics of the Household

, Volume 8, Issue 4, pp 527–549 | Cite as

Equivalence scales, the cost of children and household consumption patterns in Italy

  • Fabrizio Balli
  • Silvia Tiezzi


This article deals with the estimation of parametric equivalence scales for Italian households with different demographic characteristics: composition, location and number of employed members in the household. Using a sample of 43,701 observations on monthly current expenditures from 1997 to 2004 we estimate a demand system for ten goods and we tackle the problem of corner solutions for some goods adopting the Two Step estimator proposed by Shonkweiler and Yen (Am J Agric Econ 81:972–982, 1999). The consumption behavior of households is also analyzed calculating compensated, uncompensated and expenditure elasticites for each commodity. By considering households that differ in composition (number of children), geographic location (four-different macro-areas of Italy), and number of employed adults, we allow for a range of useful comparisons.


Equivalence scales Demand analysis Censoring 

JEL Classifications

D11 D12 



We thank, without implicating, Daniele Moro and Paolo Sckokai for useful comments and discussions and Steven Yen for having sent us his templates for the two-step estimator. We also thank Pier Luigi Rizzi for his invaluable help and support. All errors remain our own.


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Agenzia Regionale Toscana per le Erogazioni in Agricoltura (ARTEA)FirenzeItaly
  2. 2.Department of EconomicsUniversity of Siena (I)SienaItaly

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