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Does Size Matter? The Impact Of Changes In Household Structure On Income Distribution In Germany

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  • ANDREAS PEICHL
  • NICO PESTEL
  • HILMAR SCHNEIDER

Abstract

Income inequality in Germany has been continuously increasing during the past 20 years. In general, this is understood as an increase in inequality of wages due to changes in bargaining power of employees. However, the role of changing household structure is widely neglected. Societal trends like a decline in birth rate and an increase in the risk of divorce affect per capita incomes, which has repercussions for the income distribution even if wages remain constant. The aim of this paper is to quantify the proportion of changing household structures in the increase in inequality. We find that the rise in inequality was indeed more due to changes of household structure and employment behavior rather than changes in wages. Moreover, a large part of this increase is compensated by the welfare state.

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Bibliographic Info

Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

Volume (Year): 58 (2012)
Issue (Month): 1 (03)
Pages: 118-141

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Handle: RePEc:bla:revinw:v:58:y:2012:i:1:p:118-141

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References

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  1. Joachim R. Frick & Jan Goebel, 2005. "Regional Income Stratification in Unified Germany using a Gini Decomposition Approach," Working Papers 15, ECINEQ, Society for the Study of Economic Inequality.
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  6. Bover, Olympia, 2008. "Wealth inequality and household structure: US vs. Spain," CEPR Discussion Papers 6680, C.E.P.R. Discussion Papers.
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  10. Markus M. Grabka, 2007. "Codebook for the $PEQUIV File 1984-2006: CNEF Variables with Extended Income Information for the SOEP," Data Documentation 21, DIW Berlin, German Institute for Economic Research.
  11. Mookherjee, Dilip & Shorrocks, Anthony F, 1982. "A Decomposition Analysis of the Trend in UK Income Inequality," Economic Journal, Royal Economic Society, vol. 92(368), pages 886-902, December.
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Citations

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Cited by:
  1. Andreas Peichl & Nico Pestel & Sebastian Siegloch, 2013. "Ist Deutschland wirklich so progressiv? Einkommensumverteilung im europäischen Vergleich," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 82(1), pages 111-127.
  2. Niehues, Judith & Peichl, Andreas, 2011. "Lower and Upper Bounds of Unfair Inequality: Theory and Evidence for Germany and the US," IZA Discussion Papers 5834, Institute for the Study of Labor (IZA).
  3. Jürgen Faik, 2012. "Impacts of an Ageing Society on Macroeconomics and Income Inequality: The Case of Germany since the 1980s," SOEPpapers on Multidisciplinary Panel Data Research 518, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. repec:nbp:journl:v:41:y:2010:i:3:p:5-34 is not listed on IDEAS
  5. Peter Haan & Michal Myck, 2010. "Safety net still in transition: labour market incentive effects of social support in Poland and Germany," Bank i Kredyt, National Bank of Poland, Economic Institute, vol. 41(3), pages 5-34.
  6. Regina Flake, 2012. "Multigenerational Living Arrangements among Migrants," Ruhr Economic Papers 0366, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Jurgen Faik & Uwe Fachinger, 2013. "The decomposition of well-being categories: An application to Germany," Working Papers 307, ECINEQ, Society for the Study of Economic Inequality.
  8. Markus M. Grabka & Ursina Kuhn, 2012. "The Evolution of Income Inequality in Germany and Switzerland since the Turn of the Millennium," SOEPpapers on Multidisciplinary Panel Data Research 464, DIW Berlin, The German Socio-Economic Panel (SOEP).
  9. Jan Goebel & Markus M. Grabka, 2011. "Entwicklung der Altersarmut in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(2), pages 101-118.
  10. KYZYMA Iryna, 2013. "Changes in the patterns of poverty duration in Germany, 1992-2009," CEPS/INSTEAD Working Paper Series 2013-06, CEPS/INSTEAD.

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