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Income comparisons among neighbours and life satisfaction in East and West Germany

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  • Knies, Gundi

Abstract

This paper draws on the German Socio-economic Panel Study (SOEP) to investigate whether changes in others' income are perceived differently in post-transition and capitalist societies. We find that the neighbourhood income effect for West Germany is negative and slightly more marked in neighbourhoods where the neighbours interact socially. In contrast, the coefficients on neighbourhood income in East Germany are positive, but not statistically significant. This suggests not only that there is a divide between East and West Germany, but also that neighbours may not be a relevant comparison group in societies that have comparatively low levels of neighbouring.

Suggested Citation

  • Knies, Gundi, 2010. "Income comparisons among neighbours and life satisfaction in East and West Germany," ISER Working Paper Series 2010-11, Institute for Social and Economic Research.
  • Handle: RePEc:ese:iserwp:2010-11
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    File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2010-11.pdf
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    References listed on IDEAS

    as
    1. Gundi Knies & Simon Burgess & Carol Propper, 2008. "Keeping up with the Schmidt`s – An Empirical Test of Relative Deprivation Theory in the Neighbourhood Context," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 128(1), pages 75-108.
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    5. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 963-1002.
    6. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
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    15. Michael Shields & Stephen Wheatley Price & Mark Wooden, 2009. "Life satisfaction and the economic and social characteristics of neighbourhoods," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(2), pages 421-443, April.
    16. Jan Goebel & C. Katharina Spieß & Nils R. J. Witte & Susanne Gerstenberg, 2007. "Die Verknüpfung des SOEP mit MICROM-Indikatoren: Der MICROM-SOEP Datensatz," Data Documentation 26, DIW Berlin, German Institute for Economic Research.
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    Cited by:

    1. Holger Stichnoth, 2013. "Reference standards for income comparisons: evidence from immigrants' return visits," Economics Bulletin, AccessEcon, vol. 33(4), pages 2707-2717.
    2. Runli Xie, 2010. "Consumption Growth and Volatility with Consumption Externalities," SFB 649 Discussion Papers SFB649DP2010-057, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.

    More about this item

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Z1 - Other Special Topics - - Cultural Economics

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