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The Evolution of Income Inequality in Germany and Switzerland since the Turn of the Millennium

Author

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  • Markus M. Grabka
  • Ursina Kuhn

Abstract

This paper presents and compares trends in income inequality in Switzerland and Germany from 2000 to 2009 using harmonized data from the Socio-Economic Panel (SOEP) and the Swiss Household Panel (SHP). Whereas in Germany inequality has increased substantially during this period, in Switzerland inequality in market incomes has increased onlymarginally and inequality in disposable incomes has decreased slightly. Economic and demographic indicators suggest that labor market participation - but not economic growth, globalization, or sectoral change - are potential explanations. The decomposition of inequality reveals the effects of Germany's slightly older population and smaller household sizes, as well as the impact of educational expansion and government redistribution.

Suggested Citation

  • Markus M. Grabka & Ursina Kuhn, 2012. "The Evolution of Income Inequality in Germany and Switzerland since the Turn of the Millennium," SOEPpapers on Multidisciplinary Panel Data Research 464, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp464
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.407154.de/diw_sp0464.pdf
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    References listed on IDEAS

    as
    1. Biewen, Martin & Juhasz, Andos, 2010. "Understanding Rising Income Inequality in Germany," IZA Discussion Papers 5062, Institute for the Study of Labor (IZA).
    2. Enrico Bolzani & Ramses H. Abul Naga, 2002. "La Distribution des Salaires en Suisse: Quelques Observations sur la Récession des Années 90," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(II), pages 115-136, June.
    3. 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.
    4. Mary C. Daly & Robert G. Valletta, 2006. "Inequality and Poverty in United States: The Effects of Rising Dispersion of Men's Earnings and Changing Family Behaviour," Economica, London School of Economics and Political Science, vol. 73(289), pages 75-98, February.
    5. Anthony B. Atkinson & Andrea Brandolini, 2011. "On the identification of the “middle class”," Working Papers 217, ECINEQ, Society for the Study of Economic Inequality.
    6. Antonczyk, Dirk & DeLeire, Thomas & Fitzenberger, Bernd, 2010. "Polarization and Rising Wage Inequality: Comparing the U.S. and Germany," IZA Discussion Papers 4842, Institute for the Study of Labor (IZA).
    7. Stefan Bach & Giacomo Corneo & Viktor Steiner, 2009. "From Bottom To Top: The Entire Income Distribution In Germany, 1992-2003," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(2), pages 303-330, June.
    8. Cornia, Giovanni Andrea & Kiiski, Sampsa, 2001. "Trends in Income Distribution in the Post-World War II Period Evidence and Interpretation," WIDER Working Paper Series 089, World Institute for Development Economic Research (UNU-WIDER).
    9. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
    10. Shane Mathew Worner, 2006. "The Effects of Assortative Mating on Income Inequality: A Decompositional Analysis," CEPR Discussion Papers 538, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    11. Frick, Joachim R. & Jenkings, Stephen P. & Lillard, Dean R. & Lipps, Oliver & Wooden, Mark, 2007. "The Cross-National Equivalent File (CNEF) and Its Member Country Household Panel Studies," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 627-654.
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    More about this item

    Keywords

    Income inequality; subgroup decomposition; income stratification; income mobility; SOEP; SHP;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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