Does Size Matter? The Impact of Changes in Household Structure on Income Distribution in Germany

24 Pages Posted: 3 Feb 2012

See all articles by Andreas Peichl

Andreas Peichl

ZEW – Leibniz Centre for European Economic Research; University of Mannheim - School of Economics (VWL); IZA Institute of Labor Economics; University of Essex - Institute for Social and Economic Research (ISER)

Nico Pestel

IZA Institute of Labor Economics

Hilmar Schneider

IZA Institute of Labor Economics; DIW Berlin, German Institute for Economic Research

Multiple version iconThere are 3 versions of this paper

Date Written: March 2012

Abstract

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.

Keywords: inequality, poverty, richness, demography, household size, decomposition

JEL Classification: D31, D63, J11

Suggested Citation

Peichl, Andreas and Pestel, Nico and Schneider, Hilmar, Does Size Matter? The Impact of Changes in Household Structure on Income Distribution in Germany (March 2012). Review of Income and Wealth, Vol. 58, Issue 1, pp. 118-141, 2012. Available at SSRN: https://ssrn.com/abstract=1998548 or http://dx.doi.org/10.1111/j.1475-4991.2011.00448.x

Andreas Peichl (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim - School of Economics (VWL) ( email )

Mannheim 68131
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University of Essex - Institute for Social and Economic Research (ISER)

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Nico Pestel

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Hilmar Schneider

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

DIW Berlin, German Institute for Economic Research

Mohrenstraße 58
Berlin, 10117
Germany

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