Inequality In Germany Research Articles

Higher and Higher? Performance Pay and Wage Inequality in Germany

Performance pay is of growing importance to the wage structure as it applies to a rising share of employees. At the same time wage dispersion is growing continuously. This leads to the question of how the growing use of performance pay schemes is related to the increase in wage inequality? German SOEP data for the years 1984 to 2009 confirm the large increase in the application of performance pay schemes. This in turn led to an upward shift of the wage distribution by about one log point. However, it did not contribute to the growth in wage inequality. Even though wage inequality grew within the group of employees who receive performance pay, it grew even more so within the group who do not receive it. Still, the wage difference between both wage schemes remained flat over the distribution. The empirical analysis employs sequential decompositions in a quantile regression framework.

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

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 only marginally 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.

Understanding Rising Income Inequality in Germany, 1999/2000–2005/2006

We examine the factors behind rising income inequality in Europe's most populous economy. From 1999/2000 to 2005/2006, Germany experienced an unprecedented rise in net equivalized income inequality and poverty. At the same time, unemployment rose to record levels, part‐time and marginal part‐time work grew, and there was evidence for a widening distribution of labor incomes. Other factors that possibly contributed to the rise in income inequality were changes in the tax and transfer system, changes in the household structure (in particular the rising share of single parent households), and changes in other socio‐economic characteristics (e.g., age or education). We address the question of which factors were the main drivers of the observed inequality increase. Our results suggest that the largest part of the increase was due to increasing inequality in labor incomes, but that changes in employment outcomes and changes in the tax system also contributed considerable shares. By contrast, changes in household structures and household characteristics, as well as changes in the transfer system only seem to have played a minor role.

Does institutional diversity account for pay rules in Germany and Belgium?

This article examines the relationship between institutions and the remuneration of different jobs by comparing the German and Belgian labour markets with respect to a typology of institutions (social representations, norms, conventions, legislation and organizations). The observed institutional differences between the two countries lead to the hypotheses of (I) higher overall pay inequality in Germany; (II) higher pay inequalities between employees and workers in Belgium and (III) higher (lower) impact of educational credentials (work-post tenure) on earnings in Germany. We provide survey-based empirical evidence supporting hypotheses I and III, but find no evidence for hypothesis II. These results underline the importance of institutional details: although Germany and Belgium belong to the same ‘variety of capitalism’, we provide evidence that small institutional disparities within Continental-European capitalism account for distinct structures of pay.

Lifetime Earnings Inequality in Germany

This paper documents the magnitude, pattern, and evolution of lifetime earnings inequality in Germany. Based on a large sample of earning biographies from social security records, we show that the intra-generational distribution of lifetime earnings of male workers has a Gini coefficient around .2 for cohorts born in the late 1930s and early 1940s; this amounts to about 2/3 of the value of the Gini coefficient of annual earnings. Within cohorts, mobility in the distribution of yearly earnings is substantial at the beginning of the lifecycle, decreases after-wards and virtually vanishes after age forty. Earnings data for thirty-one cohorts reveals striking evidence of a secular rise of intra-generational inequality in lifetime earnings: West-German men born in the early 1960s are likely to experience about 80 % more lifetime inequality than their fathers. In contrast, both short-term and long-term intra-generational mobility have been rather stable. Longer unemployment spells of workers at the bottom of the distribution of younger cohorts contribute to explain 30 to 40 % of the overall increase in life-time earnings inequality.

Measuring social welfare, energy and inequality in Germany

The Atkinson index is an inequality measure based on a social welfare function. We will use the Atkinson index as an analytical tool to examine the interactions between economic activity and energy services. The Atkinson index has a specific feature for the calculation of distribution. The index uses the epsilon parameter to explicitly reveal the inequality aversion of society. Epsilon defines how sensitively the Atkinson index should react to income inequalities. The results of applying the Atkinson index could make a significant contribution to science and policy debates on income and energy equity in the context of sustainable development.

Ecological analysis of social risk factors for Rotavirus infections in Berlin, Germany, 2007–2009

BackgroundSocioeconomic factors are increasingly recognised as related to health inequalities in Germany and are also identified as important contributing factors for an increased risk of acquiring infections. The aim of the present study was to describe in an ecological analysis the impact of different social factors on the risk of acquiring infectious diseases in an urban setting. The specific outcome of interest was the distribution of Rotavirus infections, which are a leading cause of acute gastroenteritis among infants and also a burden in the elderly in Germany. The results may help to generate more specific hypothesis for infectious disease transmission.MethodsWe analysed the spatial distribution of hospitalized patients with Rotavirus infections in Berlin, Germany. The association between the small area incidence and different socio-demographic and economic variables was investigated in order to identify spatial relations and risk factors. Our spatial analysis included 447 neighbourhood areas of similar population size in the city of Berlin. We included all laboratory-confirmed cases of patients hospitalized due to Rotavirus infections and notified between 01/01/2007 and 31/12/2009. We excluded travel-associated and nosocomial infections. A spatial Bayesian Poisson regression model was used for the statistical analysis of incidences at neighbourhood level in relation to socio-demographic variables.ResultsAltogether, 2,370 patients fulfilled the case definition. The disease mapping indicates a number of urban quarters to be highly affected by the disease. In the multivariable spatial regression model, two risk factors were identified for infants (<4 year olds): Rotavirus incidence increased by 4.95% for each additional percent of unemployed inhabitants in the neighbourhood (95% credibility interval (CI): 3.10%-6.74%) and by 0.53% for each additional percent of children attending day care in the neighbourhood (95% CI: 0.00%-1.06%). We found no evidence for an association with the proportion of foreign residents, population density, the residential quality of accommodations and resident changes in the neighbourhood.ConclusionsNeighbourhoods with a high unemployment rate and high day care attendance rate appear to be particularly affected by Rotavirus in the population of Berlin. Public health promotion programs should be developed for the affected areas. Due to the ecological study-design, risk pathways on an individual patient level remain to be elucidated.

The impact of home production on economic inequality in Germany

Using representative income and time-use data from the German Socio-Economic Panel, we estimate non-monetary income advantages arising from home production and analyze their impact on economic inequality. As an alternative to existing measures, we propose a predicted wage approach that relaxes some of the strong assumptions underlying both the standard opportunity cost approach and the housekeeper wage approach. We also propose a method of adjusting the number of hours spent on home production to reduce the bias arising from multi-tasking and joint production in time-use data. Sensitivity analyses comparing results among different approaches provide indications of method effects. Although this study supports the evidence that considering home production leads to a reduction in inequality, we show that the size of this effect differs according to the variations in the mean and distribution of the estimated monetary value of home production across the three approaches. This finding underscores the need for a harmonized approach in cross-national comparative research.

Poverty and partisanship: Social and economic sources of support for the far Left in contemporary Germany

This article explores the changing politics of economic inequality in Germany in a time of economic austerity and high unemployment and how these changes have affected the electoral fortunes of parties on the German Left. While the SPD experienced a precipitous drop in its electoral support in the most recent federal elections, Die Linke (or the ‘Left’ Party) has emerged as a viable electoral force on the far Left. Though support for the PDS, Die Linke's predecessor, was almost exclusively confined to the Lander of the former DDR, Die Linke has seen its vote share increase in parts of Germany that were traditionally strongholds of the SPD. We analyze constituency-level election results from the 2005 and 2009 federal elections, examining the factors associated with the increase in support for Die Linke. We find that the party's vote share increased the most in constituencies suffering from economic decline, as well as in areas that were previously strongly supportive of the SPD. In the conclusion, we discuss the implications of these findings for the future of the German Left and for parties of the far Left in other advanced industrial countries.

Can Employment Changes Explain Rising Income Inequality in Germany?

Abstract From 2000 to 2005, Germany experienced an unprecedented rise in net equivalized income inequality and poverty. At the same time, unemployment rose to record levels and overall employment stagnated, suggesting that changes in households' conditional employment outcomes were partly responsible for the inequality increase observed. Using DiNardo /Fortin /Lemieux's semiparametric kernel density reweighting method, we examine what part of the inequality and poverty increase can be accounted for by changes in households' conditional employment outcomes. Our results suggest that employment outcomes explain only around 14 percent of the inequality increase observed, and around 23 percent of the poverty increase observed, leaving plenty of room for the contribution of other factors. JEL-Classification: D31, C14, I30

DOES SIZE MATTER? THE IMPACT OF CHANGES IN HOUSEHOLD STRUCTURE ON INCOME DISTRIBUTION IN GERMANY

Income inequality in Germany has been continually increasing during the past 20 years. One cause of this development, among others, could be structural shifts in household formation due to long‐term societal trends. These affect per capita incomes, which has repercussions for the income distribution even if wages remain constant. The aim of this paper is to quantify the proportion of changing household structures in the increase in inequality. We find that the growth of the income gap in Germany (for both East and West from 1991 to 2007) is indeed strongly related to changes in household structure and employment behavior, and a large part of this increase is compensated by the welfare state.

Changing health inequalities in Germany from 1994 to 2008 between employed and unemployed adults

Unemployment is a major determinant of health. We investigate whether health inequalities with regards to employment status have changed in Germany. We used longitudinal data for the years 1994-2008 from a representative panel study (GSOEP). The sample consisted of respondents aged 30-59 years (15 waves, 21,329 persons, 129,526 observations). We analyzed trends and determinants of self-rated health status by employment status using logistic regression and fixed-effects logistic panel models. Health inequalities by employment status increased significantly by 72% in men and by 16% in women after controlling covariates. The trends were partly mediated by consequences of unemployment such as income loss, income poverty, life satisfaction and economic sorrows. Using regression models for panel data we confirmed that the observed increases in health inequalities at the population level also exist at the individual level. Altogether, our findings indicate that health inequalities with regards to employment status increased among men between 1994 and 2008. This observation is in line with increasing income inequalities in Germany and with increasing health inequalities in other European countries.

Economic Gains from Educational Transfers in Kind in Germany

The aim of this paper is to estimate non-monetary income advantages arising from publicly provided education and to analyze their impact on the income distribution and on economic inequality in Germany. Using representative micro-data from the German Socio-Economic Panel (SOEP) and taking into consideration regional and education-specific variation, the overall result is an expected leveling effect from a simple cross-sectional perspective. However, approximating the accumulating effects over the life course within a regression framework -- and controlling for selectivity arising from having children as potential beneficiaries of educational transfers -- we find evidence of a reinforcement of social inequalities from an intergenerational perspective, especially through public funding to non-compulsory education.

Lifetime Earnings Inequality in Germany

Lifetime Earnings Inequality in Germany

A New Framework of Measuring Inequality: Variable Equivalence Scales and Group-Specific Well-Being Limits – Sensitivity Findings for German Personal Income Distribution 1995-2009

The paper examines sensitivity influences on the German personal income distribution in a time-series perspective as well as in a methodically broad manner. The author discusses the following issues: (1) For the first time, (reference) income-dependent, so-called variable equivalence scales are explicitly and extensively applied in a distributional analysis of German data which causes significant increases of income inequality compared with income-independent, constant equivalence scales. (2) Concerning different demarcations of income areas the pattern of income inequality in Germany 1995-2009 is not distinctively changed in the several variants considered. (3) For three alternative inequality indicators out of the class of Generalized Entropy indicators (mean logarithmic deviation, one of Theil’s measures of entropy, and normalized coefficient of variation), the patterns of income inequality over time are nearly the same. (4) Regarding current monthly household net income versus yearly household net income of the previous year, different patterns with respect to income inequality occur during the ob-served period of time. Especially in the first decade of the 21st century the corresponding pat-terns differ from each other. In a further step the new approach related to income distribution, which incorporates variable equivalence scales, is applied to socio-demographic stratification to exemplarily demonstrate the power of this new approach. All in all, the analyses of the paper refer to the necessity of a rigorous methodological foundation of distributional studies, especially concerning the selection of a set of (preferably variable) equivalence scales, the choice of the inequality indicator, and – not least – of the income variable.

The Welfare State and Equality? Stratification Realities and Aspirations in Three Welfare Regimes

Welfare regimes differ in their impact on social inequality in important ways. While previous research has explored the shape of stratification across nations and citizens’ normative attitudes towards inequality, scant attention has been given to citizens’ perceptions of actual stratification across welfare regimes. Using the 1999 International Social Survey Programme, we compare perceptions of inequality in Germany, Sweden, and the United States. More specifically, we ask how the stratification reality in each country is assessed by its citizens, whether it meets their stratification aspirations, and whether these perceptions differ systematically both across and within welfare regimes. Our results show that perceptions vary in a clear and meaningful way across countries as well as between different social groups within a given welfare regime. For instance, Americans are more likely to view society as unequal, but only slightly more likely to prefer that extent of inequality. Conversely, the Swedish clearly view their society as more equal than citizens in the United States and Germany, yet not nearly as equal as they would like it to be. Our multivariate results reveal important similarities and differences as well, such as socio-economic cleavages in the United States, and cleavages between labour market insiders and outsiders in Germany.

Das Verbraucherinsolvenzverfahren: Integration zeigt alte und neue Muster sozialer Ungleichheit in der Risikogesellschaft / The consumer insolvency process: integration highlights old and new patterns of social inequality in risk society

Summary With the implementation of the German Insolvency Statute in 1999, private households were given the legal right to file for bankruptcy. Prior to this, financially destitute households were trapped on the edge of socioeconomic marginality for life. Most published reports about insolvency in Germany have regarded overindebtedness as the particular problem of the underclass and caused by a persistent lack of resources. With the cultural change of the 1980s, the scientific analysis of social inequality in Germany emphasized the existence of horizontal social inequality “beyond classes” (Beck) due to the process of individualization. Given that “unemployment”, “divorce/separation” and “loss of direction” are cited as the main reasons for overindebtedness, the German Insolvency Statute would appear to provide a solution for a societal problem that extends beyond class boundaries, particularly if the underclass were adequately represented in the number of successful bankruptcy claims. However, the well-known phenomenon of differential “access to the law” arises here. Middle-class children, who previously failed to complete higher education or even maintain the status of their fathers are highly overrepresented in bankruptcy cases. In providing a cure for middle-class problems, the private bankruptcy process demonstrates the persistence of class structure in today’s Germany.

A Detailed Decomposition of Changes in Wage Inequality in Reunified Post-Transition Germany 1999-2006: Accounting for Sample Selection

In this article, I analyze the changes in wage inequality in the eastern region, western region and reunified Germany a decade after For that purpose, I use data from the German Socio-Economic Panel for the period 1999-2006, and implement the decomposition methodologies of Fields (2003) and Yun (2006). I find that during the sub-period 1999-2002 each of the characteristics effect, coefficient effect and residual effect contributed to the increasing levels of wage inequality in Germany. On the other hand, the relative stability in wage inequality during the sub-period 2002-2006 was caused by the fact that the characteristics effect and the residual effect influenced wage inequality negatively, whereas the coefficient effect maintained a positive influence in both the western region, eastern region and in reunified Germany alike. Hence, I conclude that after 1999, changes in wage inequality in Germany can be explained by both; changes in workers characteristics and changes in the wage structure, and not by changes in the wage structure alone, as the case has been during the transition process in the first decade after reunification.

Accounting for Imputed and Capital Income Flows in Income Inequality Analyses

Using representative and consistent microdata from the German Socio-Economic Panel Study (SOEP) from 1985-2007, we illustrate that capital income (CI = return on financial investments) and imputed rent (IR = return on investments in owner-occupied housing) have become increasingly important sources of economic inequality in Germany over the last two decades. Whereas the operationalization of CI in this paper is based on monetary returns on financial investments only, our definition of IR follows a regulation by the European Commission, (EC) which is currently being used to harmonize income measurement for the European Statistics on Income and Living Conditions (EU-SILC) in Europe. While both of these components represent some kind of return on alternative private investments, our results indicate that they do not coincide in their impacts on income inequality and poverty. In line with the literature, net IR as defined according to the EC regulation tends to exert a dampening effect on inequality and relative poverty, very much driven by the increasing share of outright ownership among the elderly. On the other hand, inequality is boosted by CI especially when looking at the upper tail of the income distribution. As the German public pension scheme gradually loses its ability to maintain people’s living standards into retirement, we find these effects to increase over time. The analyses presented here, exemplified for Germany, make a clear case for the joint consideration of all components of private investment income for the purpose of welfare analysis, be they of a monetary or non-monetary nature. This appears to be relevant in at least three dimensions of comparative research: (1) across time; (2) across space, regions, welfare regimes; (3) across the individual life course, thus analyzing the impact of investment income on intrapersonal mobility patterns.

The socio‐political significance of changes to the vocational education system in Germany

This paper explores the effects on social inequality in Germany of ongoing changes to the employment system and, thus, vocational education. Results based on an examination of the literature indicate that students from increasingly middle‐class backgrounds with higher levels of general, rather than vocational, educational attainment are winning the competition for ever‐fewer apprenticeships. Progress for women in education is accompanied by relative declines in men’s performance on high school exit examinations and does not translate into success in the employment system. Employers are abandoning the corporate‐state organization of vocational education. The paper concludes that school degrees are increasingly important for later career opportunities. As a result, the educational system is increasingly stratified, contributing to social inequality in Germany.