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International income inequality : measuring PPP bias by estimating Engel curves for food

Almås, Ingvild
Working paper
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URI
http://hdl.handle.net/11250/163032
Date
2007-07
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  • Discussion papers (SAM) [579]
Abstract
Price-adjusted data on national incomes applied in cross-country compar-

isons are measured with bias. By studying micro data, this paper ¯nds that

the bias is systematic: the poorer a country is, the more its income tends to

be overestimated. Consequently, international income inequalities are under-

estimated.

The bias in the macro price variables (PPPs), is caused by factors ana-

logues to those creating bias in consumer price index numbers (CPIs). Ex-

ploiting this fact, the PPP bias is measured by estimating Engel curves for food, a method already established to measure CPI bias.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2007:17

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