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Title:Trade-off between consumption growth and inequality: Theory and evidence for Germany PDF Logo
Authors:Xie, Runli
Issue Date:2009
Series/Report no.:SFB 649 discussion paper 2009,035
Abstract:This paper examines the structure and evolution of consumption and consumption growth inequality. Once heterogeneous agents relate their neighbors' consumption to their own, consumption volatility and inequality are affected. The relationship predicted between the group average consumption growth and within-group growth inequality was shown as only slightly positive yet significant using survey data from the German Socio- Economic Panel (GSOEP, 1984-2005). Age and household size are crucial for withingroup inequality, as young and/or small households are more sensitive to income and consumption shocks. Large and well-educated households with unskilled jobs have shown surprisingly inferior performance in consumption growth and variance. The data also shows increases of within-group inequality directly after the reunification and the introduction of the euro.
Subjects:consumption inequality, consumption growth, German Socio-Economic Panel, altruism
JEL:E21
D91
D31
D64
Document Type:Working Paper
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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