SUBJECTIVE EQUIVALENCE SCALES FOR THE VISEGRAD GROUP COUNTRIES BASED ON MINIMUM INCOME QUESTION

In measurement of poverty and income inequality there is a need to compare income across different types of households. To make the well-being comparable across households of different sizes and composition, sometimes income per capita is used. However, such an approach assumes that all individuals' needs are the same in households and there are no economies of scale in consumption. Thus, to take into account these issues, equivalence scales could be applied. Equivalence scales are measures of the relative incomes required by households of different size and composition to attain a similar standard of living. A wide range of equivalence scales exist. In this study we estimate subjective equivalence scales based on MINQ (minimum income question). We choose this method mostly due to its acceptance among applied welfare researchers. The main aim of our study is to verify whether the equivalence scales in the Visegrad Group countries are the same as the OECD-modified scale. Our results based on EU-SILC data for 2015 indicate that the relative cost of a child in Poland exceeds the relative cost of an additional adult whereas in Hungary opposite relationship is observed. Moreover, in all the Visegrad Group countries stronger economies of scale than the OECD-modified scale assumes are observed.