Income Growth in German Households: East Germany Falls Behind
AbstractFollowing the enormous growth in household incomes in the former EastGermany during the first half of the 1990s (which was based, in particular,on meteoric wage rises, accompanying pension adjustments, and theincrease in receipt of social welfare benefits), east German incomes subsequentlyexpanded only moderately. Income growth was not as strong as inwest Germany, largely because total earned income expanded only marginally.This feeble growth was due exclusively to the weak employment trend.While the income growth in households with an earned income was lowerfrom the mid-1990s onward than it had been previously, it nonetheless keptpace with the trend for average earned income in west German workinghouseholds. The adjustment of east German wages to the west Germanlevel continued, albeit at an increasingly slow pace.A growing number of east German households are dependent on socialtransfers, and these transfers account for an increasingly large share ofhousehold income. There is little evidence of a similar trend in west Germany,given that employment growth is somewhat more favorable in thispart of the country. Moreover, the share of east German households inreceipt of old-age pensions has increased at a stronger rate than in west Germany.In 2002, social security benefits and statutory pensions accounted foralmost 40% of total net household income in east Germany, compared withonly just over a quarter of net household income in west Germany.Not only has the share of pensioner households increased in east Germany_ as it also has in the western part of the country _ but the structure ofhouseholds has also undergone a general transformation within a relativelyshort period of time. Shortly after reunification, east German householdshad more members than west German households, on average, whereasnow they have fewer. In particular, the share of families with children [...]
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Bibliographic InfoArticle provided by DIW Berlin, German Institute for Economic Research in its journal Weekly Report.
Volume (Year): 1 (2005)
Issue (Month): 15 ()
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- Tilman Brück & Heiko Peters, 2009.
"20 Years of German Unification: Evidence on Income Convergence and Heterogeneity,"
SOEPpapers on Multidisciplinary Panel Data Research
229, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Brück, Tilman & Peters, Heiko, 2009. "20 years of German unification: Evidence on income convergence and heterogeneity," Working Papers 03/2009, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
- Tilman Brück & Heiko Peters, 2009. "20 Years of German Unification: Evidence on Income Convergence and Heterogeneity," Discussion Papers of DIW Berlin 925, DIW Berlin, German Institute for Economic Research.
- Brück, Tilman & Peters, Heiko, 2009. "20 Years of German Unification: Evidence on Income Convergence and Heterogeneity," IZA Discussion Papers 4454, Institute for the Study of Labor (IZA).
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