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The Changes of Cost of Children for Turkey by Using Income-Dependent Equivalence Scales

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Abstract

This study aims to estimate the cost of children in Turkey by using equivalence scale approach for different income levels and suggests a new commodity composition for Muslim countries. We used 2003, 2007 and 2014 household budget survey micro data set. According to the calculations of Engel equivalence scales, the cost of children decreases from 2003 to 2014 in Turkey. Since the data of 2007 is determined as reasonable consumption behaviours of Turkish households, the inequality and poverty researches can use equivalence scales calculations of 2007. If anyone wants to estimate Rothbarth equivalence scales for a Muslim country, using of “adult goods” which is defined as “expenditures of alcohol, tobacco, adult cloths and adult shoes” in literature would not be suitable. This study suggests “a new commodity group” which is “furnishing and communication”. The Engel model estimations are significant for households who are at the middle and high income level whereas the results of Rothbarth model estimations are found as significant for low and middle income groups. As a result, we recommend to use equivalence scales estimations’ results for middle income groups in the inequality and poverty researches, since this group is free from irregular expenditure behaviors and gives significant estimations for both models.

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Notes

  1. The nonnested models test (by using J test, Cox test) measures the goodness of fit explanation of nonnested models that have different explonatory variables.

  2. The Turkstat choose randomly households using multistage stratified random sampling methodology. The sample size was quite big in 2003 since this survey consist regional representation of the variables whereas the following years do not.

  3. According to the Turkstat reports, absolute poverty with respect to basic goods is also around 18% at 2007.

  4. The number of divorced couples is 130,913 in 2014 while 95,323 in 2002 with annual increase 2.68% (www.tuik.gov.tr).

  5. We also look at the price changes of commodity groups since to decide whether the single equation models are suitable instead of AIDS model. The annual inflation rate in prices of food expenditures is 9.5% from 2003 to 2007 and it is same from 2007 to 2014. The price increases in the furnishing and communication expenditures was not high as food expenditures (5.1% in 2003–2007 period while 3.6% in 2007–2014 period). With regard to food and general consumer price index (9.4% in 2003–2007 period while 8.1% in 2007–2014 period), there is no obvious change in years. Herewith, we prefer to use single equations method instead of AIDS since there are no high relative price differences and the simplicity of former in child cost estimations.

  6. We added the estimations of the equivalence scales for ‘two child between 0 and 5 ages’ and ‘two child between 6 and 14 ages’ to the equivalence scale estimations tables as usual some of the researches.

  7. We estimated Working-Leser form of Rothbarth model by using adult clothing, alcohol and tobacco expenditures, but we cannot find any significant and expected sign in the parameter estimates. (See Table 8 of Appendix) We find positive significant coefficients for total expenditure but insignificant coefficients for some of the demographic variables. The explanation power of the regression is quite low with 0.03 R2.

  8. The 2003 HBS results indicates that 33% of Turkish households do not expend to hotel commodity group from their budgets.

  9. The 2003 HBS results indicates that 97% of Turkish households spend to ‘furnishing and communication’ that means it is very common expenditure group after ‘food’ and ‘housing’ in Turkish households budgets.

  10. We estimated equivalence scales only for low and middle-income groups from Rothbarth model (see Table 9 of Appendix). The equivalence scales from middle-income levels resemble the estimations from all households.

  11. The income elasticity of food is estimated as 0.99 in 2003 for low-income group in Turkey by using double logarithmic form (Kaya 2015).

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Acknowledgements

This research was supported by [Istanbul Technical University (ITU), Scientific Research Coordination Unit.] for presenting in Western Economic Association International (WEAI) 91st conference, Portland, USA. We thank ITU, all participants of the conference, our discussant from [Ralitza D. Dimova, University of Manchester] and our reviewers who provided insight and expertise that greatly assisted the research.

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  1. Department of Management Engineering, Faculty of Management, Istanbul Technical University, 34367, Macka, Istanbul, Turkey

    Raziye Selim & Gizem Kaya

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  1. Raziye Selim
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  2. Gizem Kaya
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Correspondence to Raziye Selim.

Appendix

Appendix

See Tables 7, 8, 9, 10.

Table 7 Household type (%)
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Table 8 Rothbarth Working-Leser regressions of ‘adult goods’
Full size table
Table 9 Rothbarth equivalence scales by income groups
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Table 10 Engel equivalence scales (single adults excluded)
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Selim, R., Kaya, G. The Changes of Cost of Children for Turkey by Using Income-Dependent Equivalence Scales. Soc Indic Res 139, 803–824 (2018). https://doi.org/10.1007/s11205-017-1722-1

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