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How Income Inequality Changed In Germany Following Reunification: An Empirical Analysis Using Decomposable Inequality Measures

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  • Johannes Schwarze

Abstract

This paper analyzes how inequality in Before and After Government income has changed in Germany since reunification using the 1990 through 1992 waves of the German Socio‐Economic Panel. A Theil decomposable inequality index is used to measure inequality in Germany and in its eastern and western states. Massive public transfers from west to east have narrowed the east‐west income gap, substantially offset the rise in income inequality from private sources, and lowered overall inequality in the western states. The net result of this policy has been a drop in After Government income inequality in Germany between 1990 and 1992.

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  • Johannes Schwarze, 1996. "How Income Inequality Changed In Germany Following Reunification: An Empirical Analysis Using Decomposable Inequality Measures," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(1), pages 1-11, March.
    • Handle: RePEc:bla:revinw:v:42:y:1996:i:1:p:1-11
    DOI: 10.1111/j.1475-4991.1996.tb00142.x
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    Cited by:

    1. Richard V. Burkhauser & J.S. Butler & Andrew J. Houtenville, 1999. "Changes in Permanent Income Inequality in the United States and Germany in the 1990s," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 68(2), pages 284-289.
    2. Easterlin, Richard A. & Plagnol, Anke C., 2008. "Life satisfaction and economic conditions in East and West Germany pre- and post-unification," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 433-444, December.
    3. Jurgen Faik & Uwe Fachinger, 2013. "The decomposition of well-being categories: An application to Germany," Working Papers 307, ECINEQ, Society for the Study of Economic Inequality.
    4. Angela Fiedler & Nicola Fuchs-Schündeln, 2011. "Die ungleiche Entwicklung der Ungleichheit in Deutschland seit der Wiedervereinigung," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(03), pages 24-32, June.
    5. Easterlin, Richard A., 2009. "Lost in transition: Life satisfaction on the road to capitalism," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 130-145, August.
    6. Bruckmeier, Kerstin & Schwengler, Barbara, 2009. "The impact of federal social policies on spatial income inequalities in Germany : empirical evidence from social security data," IAB-Discussion Paper 200901, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Sommer, Mathias, 2008. "Understanding the trends in income, consumption and wealth inequality and how important are life-cycle effects?," Papers 08-12, Sonderforschungsbreich 504.
    8. Andreas Peichl & Nico Pestel & Hilmar Schneider, 2012. "Does Size Matter? The Impact Of Changes In Household Structure On Income Distribution In Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(1), pages 118-141, March.
    9. Andreas Kuhn, 2013. "Inequality Perceptions, Distributional Norms, and Redistributive Preferences in East and West Germany," German Economic Review, Verein für Socialpolitik, vol. 14(4), pages 483-499, November.
    10. Grabka, Markus M. & Schwarze, Johannes & Wagner, Gert G., 1999. "How Unification and Immigration Affected the German Income Distribution," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 43(4–6), pages 867-878.
    11. Nicola Fuchs-Schuendeln & Dirk Krueger & Mathias Sommer, 2010. "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 103-132, January.
    12. Dekkers, G.J.M. & Nelissen, J.H.M., 2001. "The Components of Income Inequality in Belgium : Applying the Shorrocks-Decomposition with Bootstrapping," Other publications TiSEM 4b9c6b62-0382-40eb-9b5c-9, Tilburg University, School of Economics and Management.
    13. Viktor Steiner & Patrick A. Puhani, 1997. "Economic Restructuring, the Value of Human Capital, and the Distribution of Hourly Wages in Eastern Germany, 1990 to 1994," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(1), pages 197-204.
    14. Mathias Sommer, 2008. "Understanding the trends in income, consumption and wealth inequality and how important are life-cycle effects?," MEA discussion paper series 08160, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    15. Hao Wei & Xi Wang & Chunming Zhao, 2012. "An analysis of the influences of scholars and their academic works in Chinese entrepreneurship field: Based on the CSSCI (2009-2010)," E3 Journal of Business Management and Economics., E3 Journals, vol. 3(5), pages 162-172.
    16. Vazquez-Alvarez, R., 2001. "A nonparametric approach to the sample selection problem in survey data," Other publications TiSEM 45870f3f-60db-40c3-83ef-5, Tilburg University, School of Economics and Management.

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