Engel Expenditure Curves for Households in the Slovak Republic and Income Elasticity of Expenditure
Engel Expenditure Curves for Households in the Slovak Republic and Income Elasticity of Expenditure

Author(s): Elena Hoškova, Iveta Zentkova
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Engel expenditure curves; Impact of income; Income elasticity of expenditure
Summary/Abstract: The paper aims to investigate how household income in the Slovak Republic affects household expenditure on various goods and services. The data are drawn from the Statistical Office of the Slovak Republic for the period 2005-2022. The impact of income on expenditure was quantified through Engel expenditure functions for 11 groups of goods and services. The results of the regression analysis indicated that expenditure on all the goods and services under study increased with the increase in income. Income elasticities of expenditure indicated that the expenditure of a household with two children was the most elastic to a change in income. For example, the income elasticities of expenditure for transport and post and telecommunications were 1.791 and 1.2 respectively. The Engel curves for these goods converge to line 45. Expenditure trends for households with three or more children could be explained by income only for some goods and services. In general, these households also responded less elastically to changes in income compared to other households.

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