The impact of federal social policies on spatial income inequalities in Germany: empirical evidence from social security data

Kerstin Bruckmeier and Barbara Schwengler
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Kerstin Bruckmeier: Institute for Employment Research (IAB), Nuremberg, Germany
Barbara Schwengler: Institute for Employment Research (IAB), Nuremberg, Germany

No 200901, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "Almost twenty years after German reunification there are still huge income disparities between western and eastern regions in Germany. The main purpose of the paper is to show how social transfer payments reduce these inter-regional disparities. In a first step we examine inequalities in the distribution of gross income from dependent employment and self-employment at the small-area level of 439 NUTS-3 units. Our distributional analysis quantifies regional wage inequalities driven by economic disparities and different patterns of employment. A decomposition analysis reveals that large wage differentials exist not only between eastern and western Germany but also within western regions. Furthermore we estimate the income effects of the German unemployment and pension insurance using different sources of social security data at regional level. The results indicate large regional redistributive effects across areas: the share of social benefits and payments as a percentage of total net income ranges from 11 per cent to 41 per cent. Like other European states, Germany faces several problems concerning its welfare system. Recent reforms of the welfare system in 2004 and 2005 also affected some core principles of social security. Our results show that changing parameters of eligibility, claims and financing will influence the spatial income distribution. Hence further research on this topic is recommended when data for 2005 and later years are available." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; Ostdeutschland; Westdeutschland; Einkommenseffekte; Einkommensentwicklung; Einkommenshöhe; Einkommensverteilung; abhängig Beschäftigte; Lohnhöhe; regionale Disparität; regionaler Vergleich; Rentenversicherung; Selbständige; Sozialausgaben; Sozialleistungen; Sozialpolitik; Sozialversicherung; Transferleistung; Arbeitslosenversicherung; Verteilungseffekte; 2001-2003 (search for similar items in EconPapers)
JEL-codes: D30 D63 H55 R12 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2009
New Economics Papers: this item is included in nep-eec, nep-geo and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:200901

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