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Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries

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Author Info
Nicola Fuchs-Schuendeln (University of Frankfurt)
Dirk Krueger (University of Pennsylvania)
Mathias Sommer (University of Mannheim)

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Abstract

In this paper we first document inequality trends in wages, hours worked, earnings, consumption, and wealth for Germany from the last twenty years. We generally find that inequality was relatively stable in West Germany until the German Reunification, and then trended upwards for wages and market incomes, especially after about 1998. Disposable income and consumption, on the other hand, display only a modest increase in inequality over the same period. These trends occured against the backdrop of lower trend growth of earnings, incomes and consumption in the 1990s relative to the 1980s. In the second part of the paper we further analyze the differences between East and West Germans in terms of the evolution of levels and inequality of wages, income, and consumption. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2009.09.004
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

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Related research
Keywords: Inequality; German reunification;

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D33 - Microeconomics - - Distribution - - - Factor Income Distribution
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

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  1. Biewen, Martin, 2000. "Income Inequality in Germany during the 1980s and 1990s," Review of Income and Wealth, Blackwell Publishing, vol. 46(1), pages 1-19, March.
  2. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2005. "Two Views of Inequality Over the Life Cycle," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 765-775, 04/05. [Downloadable!] (restricted)
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  3. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, vol. 72(1), pages 1-32, 01. [Downloadable!] (restricted)
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  4. Bayer, Christian & Juessen, Falko, 2009. "The Life-Cycle and the Business-Cycle of Wage Risk: A Cross-Country Comparison," IZA Discussion Papers 4402, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Stefan Bach & Giacomo Corneo & Viktor Steiner, 2007. "From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992 - 2001," Discussion Papers of DIW Berlin 683, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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  6. Martin Biewen, 2005. "The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality," German Economic Review, Blackwell Publishing, vol. 6(4), pages 445-469, November. [Downloadable!] (restricted)
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  7. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-67, June. [Downloadable!] (restricted)
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  8. Fatih Guvenen, 2007. "Learning Your Earning: Are Labor Income Shocks Really Very Persistent?," American Economic Review, American Economic Association, vol. 97(3), pages 687-712, June. [Downloadable!]
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  9. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2007. "Revisiting the German Wage Structure," IZA Discussion Papers 2685, Institute for the Study of Labor (IZA). [Downloadable!]
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