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Does Work Always Pay in Germany?

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  • Christoph Scheicher

Abstract

. Income redistribution in Germany is the result of a combination of several redistribution instruments: there is a complex income tax law, different obligatory social insurances and supplementary benefits. This paper estimates income redistribution by quantile regression, using German EVS data. Two results are obtained: income after redistribution does not always increase in line with income before redistribution, i.e. for people with a low income before redistribution, it does not make sense to increase their efforts, since more work means less earnings. Further, an increasing redistribution rate for higher incomes is not always observable from the data.

Suggested Citation

  • Christoph Scheicher, 2010. "Does Work Always Pay in Germany?," German Economic Review, Verein für Socialpolitik, vol. 11(3), pages 266-277, August.
    • Handle: RePEc:bla:germec:v:11:y:2010:i:3:p:266-277
    DOI: 10.1111/j.1468-0475.2009.00481.x
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    1. repec:ces:ifodic:v:3:y:2005:i:2:p:14567648 is not listed on IDEAS
    2. Wolfgang Ochel, 2005. "Hartz IV – Welfare to Work in Germany," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(2), pages 18-25, 07.
    3. Wolfgang Ochel, 2005. "Hartz IV – Welfare to Work in Germany," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(02), pages 18-25, July.
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    Cited by:

    1. Tim Friehe & Mario Mechtel, 2017. "Gambling to leapfrog in status?," Review of Economics of the Household, Springer, vol. 15(4), pages 1291-1319, December.
    2. Friehe, Tim & Mechtel, Mario, 2014. "Conspicuous consumption and political regimes: Evidence from East and West Germany," European Economic Review, Elsevier, vol. 67(C), pages 62-81.
    3. Tim Friehe & Mario Mechtel, 2012. "Conspicuous Consumption and Communism: Evidence from East and West Germany," CESifo Working Paper Series 3922, CESifo.

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