Estimation and Comparison of Two Simple Models of Equivalence Scales for the Cost of Children.

The models of equivalence scales for the cost of children attributed to E. Engel (1895) and E. Rothbarth (1943) are presented and estimated using common demand structures on the data of the Greek Household Expenditure Survey. Further, the underlying assumptions of the models are tested. The empirical results suggest that the Engel scales are considerably higher than the Rothbarth scales. The underlying assumption of the Engel model (price independence of the scale) is rejected by the data, while that of the Rothbarth model (existence of goods on which children have income but not substitution effects) is not. Copyright 1991 by Royal Economic Society.