Are People Inequality Averse, and Do They Prefer Redistribution by the State? Evidence from German Longitudinal Data on Life Satisfaction

30 Pages Posted: 15 Feb 2002

See all articles by Johannes Schwarze

Johannes Schwarze

University of Bamberg; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Marco Haerpfer

University of Bamberg

Date Written: February 2002

Abstract

We link life-satisfaction data to inequality of the pre-government income distribution at the regional level, to estimate the degree of inequality aversion. In addition, we investigate whether a reduction in inequality by the state increases individual well-being. We find that Germans are inequality averse over the entire income distribution. However, inequality reduction by the state does not increase well-being. On the contrary, inequality reduction places something of an excess burden on middle-income earners. The paper uses data from the German Socio-economic Panel Study (GSOEP) from 1985 to 1998.

Keywords: Inequality Aversion, Redistribution, Life Satisfaction, Panel Data

JEL Classification: C23, D31, D63, I31

Suggested Citation

Schwarze, Johannes and Haerpfer, Marco, Are People Inequality Averse, and Do They Prefer Redistribution by the State? Evidence from German Longitudinal Data on Life Satisfaction (February 2002). Available at SSRN: https://ssrn.com/abstract=300646

Johannes Schwarze (Contact Author)

University of Bamberg ( email )

Kirschaeckerstrasse 39
Bamberg 96045
Germany
+49 951 863 2600 (Phone)
+49 951 863 5569 (Fax)

German Institute for Economic Research (DIW Berlin)

Mohrenstra├če 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

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

Marco Haerpfer

University of Bamberg

Kirschaeckerstrasse 39
Bamberg 96045
Germany

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