German Male Income Volatility 1984 to 2008: Trends in Permanent and Transitory Income Components and the Role of the Welfare State
AbstractDeploying data from the German Socio-Economic Panel (SOEP) we analyze the variability of individual earnings and equivalent household income. Permanent and transitory variances of male income over the period 1984-2008 are estimated for Old German Laender in order to determine their importance to income dynamics. To uncover the role of the welfare state in smoothening earnings shocks we compute different income concepts reaching from gross earnings to net equivalent household income. We find evidence that the overall inequality of earnings in Germany has been rising throughout the period due to both higher permanent inequality and higher volatility. However, taking the welfare state and its institutions into account, we find that net household income has remained fairly stable.
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Bibliographic InfoPaper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 325.
Length: 25 p.
Date of creation: 2010
Date of revision:
Earnings inequality; permanent income inequality; transitory income volatility; earnings dynamics; safety net; transfer payments;
Other versions of this item:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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- Gulgun Bayaz Ozturk & Richard V. Burkhauser & Kenneth A. Couch, 2013.
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2011/25, Free University Berlin, School of Business & Economics.
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- Charlotte Bartels, 2011. "Redistribution and Insurance in the German Welfare State," SOEPpapers on Multidisciplinary Panel Data Research 419, DIW Berlin, The German Socio-Economic Panel (SOEP).
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