Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150843
Authors: 
Knies, Gundi
Year of Publication: 
2010
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research 298
Abstract: 
A series of studies have suggested that changes in others' income may be perceived differently in post-transition and capitalist societies. This paper draws on the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics in very tightly drawn neighbourhoods to investigate whether reactions to changes in their neighbours' income divide the German nation. We find that the neighbourhood income effect for West Germany is negative (which is in line with the "relative income" hypothesis) and slightly more marked in neighbourhoods that may be assumed to be places where social interactions between neighbours take place. In contrast, the coefficients on neighbourhood income in East Germany are positive (which is consistent with the 'signalling' hypothesis), but statistically not significant. This suggests not only that there is a divide between East and West Germany, but also that neighbours may not be a relevant comparison group in societies that have comparatively low levels of neighbouring.
Subjects: 
Comparison income
Reference group
Life Satisfaction
Neighbourhood effects
JEL: 
I31
C23
Z1
Document Type: 
Working Paper

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