Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315323 
Year of Publication: 
2024
Citation: 
[Journal:] The Journal of Economic Inequality [ISSN:] 1573-8701 [Volume:] 22 [Issue:] 3 [Publisher:] Springer US [Place:] New York [Year:] 2024 [Pages:] 531-550
Publisher: 
Springer US, New York
Abstract: 
Abstract Earnings inequality in Germany has increased dramatically. Measuring inequality locally at the level of cities annually since 1985, we find that behind this development is the rapidly worsening inequality in the largest cities, driven by increasing earnings polarisation. In the cross-section, local earnings inequality rises substantially in city size, and this city-size inequality penalty has increased steadily since 1985, reaching an elasticity of .2 in 2010. Inequality decompositions reveal that overall earnings inequality is almost fully explained by the within-locations component, which in turn is driven by the largest cities. The worsening inequality in the largest cities is amplified by their greater population weight. Examining the local earnings distributions directly reveals that this is due to increasing earnings polarisation that is strongest in the largest places. Both upper and lower distributional tails become heavier over time, and are the heaviest in the largest cities. We establish these results using a large and spatially representative administrative data set, and address the top-coding problem in these data using a parametric distribution approach that outperforms standard imputations.
Subjects: 
Earnings inequality
spatial inequality
inequality decomposition
local earnings polarisation
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version
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