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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. Copyright 2009 The Author. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd. 2009.

Suggested Citation

  • Christoph Scheicher, 2010. "Does Work Always Pay in Germany?," German Economic Review, Verein für Socialpolitik, vol. 11, pages 266-277, August.
    • Handle: RePEc:bla:germec:v:11:y:2010:i::p:266-277
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    References listed on IDEAS

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    1. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, November.
    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.
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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. Tim Friehe & Mario Mechtel, 2012. "Conspicuous Consumption and Communism: Evidence from East and West Germany," IAAEU Discussion Papers 201203, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. 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.

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