Relative Inequality and Poverty in Germany and the United States Using Alternative Equivalence Scales

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Abstract
German and United States data from the Luxembourg Income Study are used to compare the relative economic well-being of Germans and Americans in the 1980s. In our analysis we use both official equivalence scales and consumption-based country-specific equivalence scales developed for Germany and the United States by Merz et al. (1993). We verify previous studies that show that inequality and the incidence of poverty are greater in the United States than in Germany. Overall inequality and poverty levels are found not to be sensitive to the equivalence scale used. But the official German equivalence scales yields quite different results from those using all other scales with respect to the relative income and poverty levels of vulnerable groups within the population, especially older single people.
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