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Income Inequality in Germany during the 1980s and 1990s

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  • Biewen, Martin

Abstract

This paper estimates a variety of inequality measures for three sub-samples of the German population using cross-sectional data on equivalent income from the German Socio-Economic Panel (GSOEP). The sub-populations under consideration are residents of West Germany including foreigners for the years 1984 to 1996, residents of East Germany for the years 1990 to 1996 and a comprehensive German population for the years 1990 to 1996. Bootstrap methods are applied to test whether changes in inequality are statistically significant. In order to account for panel attrition and over-sampling, sample weights are incorporated into the estimation procedure. The empirical results confirm the relative stability of the West German income distribution. While income inequality in West Germany has generally not altered in an economically relevant way over the period 1985 to 1996, inequality in East Germany has increased after reunification. Despite this increase, inequality remains substantially higher in the western part of the country. Convergence of eastern mean income to the western level generally overcompensated the rise in inequality in East Germany, so that the level of inequality in unified Germany is lower in 1996 than in 1990. Copyright 2000 by The International Association for Research in Income and Wealth.

Suggested Citation

  • Biewen, Martin, 2000. "Income Inequality in Germany during the 1980s and 1990s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 1-19, March.
  • Handle: RePEc:bla:revinw:v:46:y:2000:i:1:p:1-19
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    Cited by:

    1. Kraus, Margit & Hölsch, Katja, 2002. "European schemes of social assistance: an empirical analysis of set-ups and distributive impacts," ZEW Discussion Papers 02-51, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2015. "Offshoring and labour market reforms: Modelling the German experience," Hohenheim Discussion Papers in Business, Economics and Social Sciences 04-2015, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    3. Katja Hölsch, 2002. "The Effect of Social Transfers in Europe: An Empirical Analysis Using Generalized Lorenz Curves," LIS Working papers 317, LIS Cross-National Data Center in Luxembourg.
    4. Andreas Kuhn, 2011. "Inequality Perceptions, Distributional Norms, and Redistributive Preferences in East and West Germany," NRN working papers 2011-15, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    5. Ahlheim, Michael & Schneider, Friedrich, 2013. "Considering household size in contingent valuation studies," MPRA Paper 62898, University Library of Munich, Germany.
    6. Richard V. Burkhauser & Takashi Oshio & Ludmila Rovba, 2008. "How the Distribution of After-Tax Income Changed Over the 1990s Business Cycle: A Comparison of the United States, Great Britain, Germany and Japan," Journal of Income Distribution, Journal of Income Distribution, vol. 17(1), pages 87-109, March.
    7. Usamah Fayez Al-Farhan, 2010. "A Detailed Decomposition of Changes in Wage Inequality in Reunified Post-transition Germany 1999-2006: Accounting for Sample Selection," SOEPpapers on Multidisciplinary Panel Data Research 269, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Rukwid, Ralf, 2007. "Arbeitslosigkeit und Lohnspreizung - Empirische Befunde zur Arbeitsmarktsituation gering Qualifizierter in Deutschland," Violette Reihe: Schriftenreihe des Promotionsschwerpunkts "Globalisierung und Beschäftigung" 24/2007, University of Hohenheim, Carl von Ossietzky University Oldenburg, Evangelisches Studienwerk.
    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. Margit Kraus & Katja Hölsch, 2002. "European Schemes of Social Assistance: An Empirical Analysis of Set-Ups and Distributive Impacts," LIS Working papers 312, LIS Cross-National Data Center in Luxembourg.
    11. Nicola Fuchs-Schündeln, 2008. "The Response of Household Saving to the Large Shock of German Reunification," Working Papers, Center for Retirement Research at Boston College wp2008-21, Center for Retirement Research, revised Dec 2008.
    12. Biewen, Martin, 2002. "Bootstrap inference for inequality, mobility and poverty measurement," Journal of Econometrics, Elsevier, vol. 108(2), pages 317-342, June.
    13. Martin Biewen, 2005. "The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality," German Economic Review, Verein für Socialpolitik, vol. 6(4), pages 445-469, November.
    14. Nicola Fuchs-Schuendeln, 2005. "Adjustment to a Large Shock - Do Households Smooth Low Frequency Consumption?," 2005 Meeting Papers 517, Society for Economic Dynamics.
    15. Margit Kraus & Katja Hölsch, 2003. "Poverty Alleviation and the Degree of Centralisation in European Schemes of Social Assistance," LIS Working papers 342, LIS Cross-National Data Center in Luxembourg.
    16. 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.
    17. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2016. "Offshoring and labour market reforms in Germany: Assessment and policy implications," Economic Modelling, Elsevier, vol. 53(C), pages 314-333.
    18. Thomas Beissinger & Nathalie Chusseau & Joel Hellier, 2014. "Offshoring, employment, labour market reform and inequality: Modelling the German experience," Working Papers 330, ECINEQ, Society for the Study of Economic Inequality.
    19. Córdoba, Juan Carlos & Verdier, Geneviève, 2008. "Inequality and growth: Some welfare calculations," Journal of Economic Dynamics and Control, Elsevier, vol. 32(6), pages 1812-1829, June.
    20. Kuhn, Andreas, 2011. "Inequality Perceptions, Distributional Norms, and Redistributive Preferences in East and West Germany," IZA Discussion Papers 5573, Institute for the Study of Labor (IZA).
    21. 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.
    22. Heer, Burkhard, 2002. "The German Unemployment Compensation System: Effects on Aggregate Savings and Wealth Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 371-394, September.
    23. Michael Ahlheim & Ulrike Lehr, 2008. "Equity and Aggregation in Environmental Valuation," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 295/2008, Department of Economics, University of Hohenheim, Germany.

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