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

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  • Dirk Krüger

    (Munich Center for the Economics of Aging (MEA))

Abstract

In this paper we …rst document inequality trends in wages, hours worked, earnings, consumption, and wealth for Germany from the last twenty years. We generally …nd that inequality was relatively stable inWest Germany until the German uni…cation (which happened politically in 1990 and in our data in 1991), 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 di¤erences between East and West Germans in terms of the evolution of levels and inequality of wages, income, and consumption.

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Paper provided by Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy in its series MEA discussion paper series with number 09184.

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Date of creation: 20 Jul 2009
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Handle: RePEc:mea:meawpa:09184

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  1. Meghir, Costas & Pistaferri, Luigi, 2002. "Income Variance Dynamics and Heterogeneity," CEPR Discussion Papers 3632, C.E.P.R. Discussion Papers.
  2. Biewen, Martin, 2002. "The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality," IZA Discussion Papers 459, Institute for the Study of Labor (IZA).
  3. Fatih Guvenen, 2005. "Learning Your Earning: Are Labor Income Shocks Really Very Persistent?," Macroeconomics 0507004, EconWPA.
  4. Dustmann, Christian & Ludsteck, Johannes & Schönberg, Uta, 2007. "Revisiting the German Wage Structure," IZA Discussion Papers 2685, Institute for the Study of Labor (IZA).
  5. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-67, June.
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  7. Bach, Stefan & Corneo, Giacomo & Steiner, Viktor, 2007. "From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992-2001," CEPR Discussion Papers 6251, C.E.P.R. Discussion Papers.
  8. 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).
  9. Biewen, Martin, 2000. "Income Inequality in Germany during the 1980s and 1990s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 1-19, March.
  10. Heathcote, Jonathan & Storesletten, Kjetil & Violante, Giovanni L, 2004. "Two Views of Inequality Over the Life-Cycle," CEPR Discussion Papers 4728, C.E.P.R. Discussion Papers.
  11. Mark Hugget & Gustavo Ventura & Amir Yaron, 2002. "Human Capital and Earnings Distribution Dynamics," NBER Working Papers 9366, National Bureau of Economic Research, Inc.
  12. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429, Octomber.
  13. Markus M. Grabka & Joachim R. Frick, 2008. "Schrumpfende Mittelschicht: Anzeichen einer dauerhaften Polarisierung der verfügbaren Einkommen?," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 75(10), pages 101-108.
  14. Martin Biewen, 2001. "Measuring the Effects of Socio-Economic Variables on the Income Distribution: An Application to the East German Transition Process," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 185-190, February.
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