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The impact of federal social policies on spatial income inequalities in Germany : empirical evidence from social security data

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Author Info
Bruckmeier, Kerstin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
Schwengler, Barbara (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
Abstract

"Almost twenty years after German reunification there are still huge income disparities between western and eastern regions in Germany. The main purpose of the paper is to show how social transfer payments reduce these inter-regional disparities. In a first step we examine inequalities in the distribution of gross income from dependent employment and self-employment at the small-area level of 439 NUTS-3 units. Our distributional analysis quantifies regional wage inequalities driven by economic disparities and different patterns of employment. A decomposition analysis reveals that large wage differentials exist not only between eastern and western Germany but also within western regions. Furthermore we estimate the income effects of the German unemployment and pension insurance using different sources of social security data at regional level. The results indicate large regional redistributive effects across areas: the share of social benefits and payments as a percentage of total net income ranges from 11 per cent to 41 per cent. Like other European states, Germany faces several problems concerning its welfare system. Recent reforms of the welfare system in 2004 and 2005 also affected some core principles of social security. Our results show that changing parameters of eligibility, claims and financing will influence the spatial income distribution. Hence further research on this topic is recommended when data for 2005 and later years are available." (author's abstract, IAB-Doku) ((en))

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Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200901.

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Length: 35 pages
Date of creation: 08 Jan 2009
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Handle: RePEc:iab:iabdpa:200901

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Keywords: Sozialpolitik; Verteilungseffekte; Einkommenseffekte; regionale Disparität; Einkommenshöhe; Einkommensentwicklung; regionaler Vergleich; Sozialversicherung; Sozialausgaben; Sozialleistungen; Transferleistung; Lohnhöhe; Arbeitslosenversicherung; Rentenversicherung; abhängig Beschäftigte; Selbständige; Einkommensverteilung; Ostdeutschland; Westdeutschland; Bundesrepublik Deutschland;

Find related papers by JEL classification:
D30 - Microeconomics - - Distribution - - - General
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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    Other versions:
  2. 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)
    Other versions:
  3. Bondonio, Daniele, 2002. "Evaluating the Employment Impact of Business Incentive Programs in EU Disadvantaged Areas. A case from Northern Italy," P.O.L.I.S. department's Working Papers 27, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  6. Johannes Gernandt & Friedhelm Pfeiffer, 2006. "Rising Wage Inequality in Germany," Working Papers of the Research Group Heterogenous Labor 06-12, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim. [Downloadable!]
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  7. Jenkins, Stephen P, 1995. "Accounting for Inequality Trends: Decomposition Analyses for the UK, 1971-86," Economica, London School of Economics and Political Science, vol. 62(245), pages 29-63, February. [Downloadable!] (restricted)
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  10. Heather Dickey, 2007. "Regional Earnings Inequality In Great Britain: Evidence From Quantile Regressions," Journal of Regional Science, Blackwell Publishing, vol. 47(4), pages 775-806. [Downloadable!] (restricted)
  11. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
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