Redistribution and insurance in the German welfare state
AbstractWelfare states redistribute both between individuals (inter-individual redistribution) reducing annual, cross-sectional inequality and over the lifecycle of an individual (intra-individual redistribution) insuring individuals against income risks in the long-term. But studies measuring redistribution often focus on a one-year period and the second aspect is neglected. To quantify both inter- and intra-individual redistribution in Germany this study uses SOEP data from 1984 to 2009 to construct long-term incomes over a 20-year period. Results show that annual, cross-sectional inequality is higher than inequality in the long-run, but the effect of redistribution is also larger annually than in the long-term. Depending on age the distributional focus of the German welfare state differs. When persons are young, state intervention reduces income differences between individuals mainly through the progressive tax system. Getting older and reaching retirement age income-smoothing redistribution via social security pensions becomes central. --
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Bibliographic InfoPaper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2011/25.
Date of creation: 2011
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long-term income inequality; income redistribution; social security;
Other versions of this item:
- Charlotte Bartels, 2012. "Redistribution and Insurance in the German Welfare State," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(2), pages 265-295.
- 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).
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-01 (All new papers)
- NEP-EUR-2012-02-01 (Microeconomic European Issues)
- NEP-IAS-2012-02-01 (Insurance Economics)
- NEP-LTV-2012-02-01 (Unemployment, Inequality & Poverty)
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