2010-09: The evolution of Engel curves and its implications for structural change (Working paper)

Loading...
Thumbnail Image
File version
Author(s)
Moneta, Alessio
Chai, Andreas
Griffith University Author(s)
Primary Supervisor
Other Supervisors
Editor(s)

Nguyen, Tom

Date
2010
Size

27 pages

File type(s)
Location
License
Abstract

The tendency for Engel curves to flatten out at high income levels is frequently cited as evidence that major shifts in household consumption patterns occur as household income rises. Empirically, little has been done to examine (i) whether saturation is indeed a general property of Engel curves, (ii) whether the rate at which Engel curves flatten out may signifcantly change over time, and (iii) how robust Engel curves are in the face of changes in the income distribution of households. Using data from the UK Family Expenditure Survey, we find evidence that saturation is indeed widespread among Engel curves across a wide range of goods and services. However, a tendency for their shape to shift over time, and for these shifts to co-move with changes in the income distribution of households, casts some doubt on whether the declining slope of Engel curves can be used to predict slowdowns in the growth rate of demand for particular goods and services. We also uncover evidence supporting the notion that industries tend to innovate goods and services in order to escape saturation pressure.

Journal Title
Conference Title
Book Title
Edition
Volume
Issue
Thesis Type
Degree Program
School
Publisher link
DOI
Patent number
Funder(s)
Grant identifier(s)
Rights Statement
Rights Statement

Copyright © 2010 by author(s). No part of this paper may be reproduced in any form, or stored in a retrieval system, without prior permission of the author(s).

Item Access Status
Note

Economics and Business Statistics

Access the data
Related item(s)
Subject

D12 - Consumer Economics: Empirical Analysis

O12 - Microeconomic Analyses of Economic Development

C14 - Semiparametric and Nonparametric Methods: General

Engel curves

Structural change

Demand saturation

Nonparametric estimation

Hierarchy of goods

Persistent link to this record
Citation
Collections