1994 Reports

The Effect of Household Characteristics on Household-Specific Inflation Rates: An Application to Trends in Child Poverty and Educational Real Wage Differentials

Miller, Cynthia K.; Idson, Todd

This paper investigates the effect demographic-specific inflation rates on the measured well being of two population groups - families with and without children, and families with different educational attainment. Out major findings are (1) families with children generally experienced lower inflation rates between 1969 and 1985 than did families without children, yet calculated trends in child poverty are not significantly affected by the use of group specific price indexes, and (2) inflation rates decreased monotonically with the education of the household head throughout this period, so that real education wage differentials (calculated using education specific price indexes) widened more than nominal education wage differentials. This last finding indicates that the relative economic well being of the less educated has declined by a greater extent than would be inferred from trends in nominal education wage differentials.