This paper introduces a theory-based equivalence scale for public in-kind transfers, which justifies comparison of distributions of extended income (cash income plus the value of public services) between European countries. We demonstrate the usefulness of the proposed equivalence scale in an empirical analysis of the effects of public health care, long-term care, education and childcare expenditure on estimates of income inequality and poverty for 24 European countries. The empirical results show significant effects of public in-kind transfers on the level of income inequality and poverty for all countries. Over the period 2006–2018, inequality and poverty estimates display rather different trends across European countries.This work has been supported by the second Network for the analysis of EU-SILC (Net-SILC2) coordinated by CEPS/INSTEAD (Luxembourg). Financial support from Eurostat, the Norwegian Ministry of Finance, and the Norwegian Research Council (grant number 261985) is gratefully acknowledged
