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How much additional income does a family with four children need to attain the same welfare level as a family with two children? And how much does a single person need compared to a childless couple? These questions are important in applied micro‐economics and underlie public policy on, for example, social benefits and child allowances. In microeconomics, this is known as the problem of measuring equivalence scales. We estimate these scales using two types of subjective survey information. First, we use answers to survey questions on the income required to attain a given utility level. We compare the results for the usual linear model with semiparametric estimates, in which the functional form of the relationship between required income and family size and actual income is left unspecified. Second, we use answers to the question: how satisfied are you with actual household income? We present parametric and semiparametric estimates for ordered response models explaining this discrete variable. We find that according to the second type of information, costs of children are much larger than according to the first.

In a binary choice panel data model with individual effects and two time periods, Manski proposed the maximum score estimator based on a discontinuous objective function and proved its consistency under weak distributional assumptions. The rate of convergence is low (N1/3) and its limit distribution cannot easily be used for statistical inference. In this paper we apply the idea of Horowitz to smooth Manski's objective function. The resulting smoothed maximum score estimator is consistent and asymptotically normal with a rate of convergence that can be made arbitrarily close to N1/2, depending on the strength of the smoothness assumptions imposed. The estimator can be applied to panels with more than two time periods and to unbalanced panels. We apply the estimator to analyze labour force participation of married Dutch females.

General empirical evidence suggests that contracting out refuse collection results in a cost decrease in the order of 20%. However, although the method of contracting out refuse collection has become more popular, it is still less common than in-house provision. This paper investigates the reasons behind this phenomenon. Recently, L?pez-de-Silanes et al. (1997) tried to explain the reservedness of local authorities towards contracting out with US-data and show that political patronage is an important explanation. In this article we give such an empirical assessment using Dutch data. We base our empirical research on the combination of the theories around efficiency, interest group influence and ideology. To test these theories we model the choice between private and public provision of refuse collection on the one hand side and the choice between in-house and out-house provision on the other side. Data are available for nearly all Dutch municipalities. A most striking conclusion is that nearly all political parties in the Netherlands do have a preference for public and in-house provision of refuse collection. We find only modest evidence for the hypothesis that a high level of real estate tax (proxy for the soundness of municipal financial affairs, the efficiency argument) or a low level