Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148337
Authors: 
Jessen, Robin
Year of Publication: 
2016
Series/Report no.: 
Diskussionsbeiträge 2016/24
Abstract: 
I propose a method to decompose changes in income inequality into the contributions of policy changes, wage rate changes, and population changes while considering labor supply reactions. Using data from the Socio-Economic Panel (SOEP), I apply this method to decompose the increase in income inequality in Germany from 2002 to 2011, a period that saw tax reductions and a controversial overhaul of the transfer system. The simulations show that tax and transfer reforms have had an inequality reducing effect as measured by the Mean Log Deviation and the Gini coefficient. For the Gini, these effects are offset by labor supply reactions. In contrast, policy changes explain part of the increase in the ratio between the 90th and the 50th income percentile. Changes in wage rates have led to a decrease in income inequality. Thus, the increase in inequality was mainly due to changes in the population.
Subjects: 
Inequality
Decomposition
Labor Supply
Microsimulation
Policy Reform
JEL: 
D31
H23
I38
J31
Document Type: 
Working Paper

Files in This Item:
File
Size
564.15 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.