Redistribution and Insurance in the German Welfare State
Welfare states redistribute both between individuals reducing annual inequality and over the life-cycle insuring against income risks. But studies measuring redistribution often focus only on a one-year period. Using German SOEP data from 1984 to 2009, long-term inequality over a 20-year period is computed and then decomposed into an inter-and intra-individual component. Results show that annual inequality is higher than long-term inequality, but redistribution is also larger from an annual perspective. In the long-term, the German welfare state clearly prioritizes insurance over redistribution. This gets even more pronounced at later stages of the life-cycle through the payment of social security pensions.
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Volume (Year): 132 (2012)
Issue (Month): 2 ()
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