In Germany, two observations can be tracked over the past 15 to 20 years: First, income inequality has constantly increased while, second, the average household size has been declining dramatically. The analysis of income distribution relies on equivalence-weighted incomes, which take into account household size. Therefore, there is an obvious link between these two developments. The aim of the paper is to quantify how the trend towards smaller households has influenced the change in income inequality. It appears that inequality would also have increased without this demographic trend. But its level would be noticeably lower than it actually is.
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers with number
205.
Find related papers by JEL classification: D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends and Forecasts
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