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Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries

  • Nicola Fuchs-Schündeln
  • Dirk Krueger
  • Mathias Sommer

In this paper we first document inequality trends in wages, hours worked, earnings, consumption, and wealth for Germany from the last twenty years. We generally find that inequality was relatively stable in West Germany until the German unification (which happened politically in 1990 and in our data in 1991), and then trended upwards for wages and market incomes, especially after about 1998. Disposable income and consumption, on the other hand, display only a modest increase in inequality over the same period. These trends occured against the backdrop of lower trend growth of earnings, incomes and consumption in the 1990s relative to the 1980s. In the second part of the paper we further analyze the differences between East and West Germans in terms of the evolution of levels and inequality of wages, income, and consumption.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15059.

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Date of creation: Jun 2009
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Publication status: published as Nicola Fuchs-Schuendeln & Dirk Krueger & Mathias Sommer, 2009. "Code and data files for "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries"," Computer Codes 09-195, Review of Economic Dynamics.
Handle: RePEc:nbr:nberwo:15059
Note: EFG
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  1. Schwarze, Johannes, 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.
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  3. Biewen, Martin, 2002. "The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality," IZA Discussion Papers 459, Institute for the Study of Labor (IZA).
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  7. Martin Biewen, 2001. "Measuring the Effects of Socio-Economic Variables on the Income Distribution: An Application to the East German Transition Process," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 185-190, February.
  8. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, vol. 72(1), pages 1-32, 01.
  9. Bayer, Christian & Juessen, Falko, 2009. "The Life-Cycle and the Business-Cycle of Wage Risk: A Cross-Country Comparison," IZA Discussion Papers 4402, Institute for the Study of Labor (IZA).
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  11. Huggett, Mark & Ventura, Gustavo & Yaron, Amir, 2006. "Human capital and earnings distribution dynamics," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 265-290, March.
  12. 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.
  13. Heathcote, Jonathan & Storesletten, Kjetil & Violante, Giovanni L, 2004. "Two Views of Inequality Over the Life-Cycle," CEPR Discussion Papers 4728, C.E.P.R. Discussion Papers.
  14. Sinn, Gerlinde & Sinn, Hans-Werner, 1992. "Kaltstart. Volkswirtschaftliche Aspekte der Deutschen Vereinigung," Monograph, Mohr Siebeck, Tübingen, edition 2, number urn:isbn:9783161459429.
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