Income inequality, household consumption and status competition in Germany

Jan Behringer (), Lukas Endres () and Till van Treeck
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Jan Behringer: Macroeconomic Policy Institute (IMK)
Lukas Endres: Macroeconomic Policy Institute (IMK)

No 219-2023, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: We analyse the decline of household saving rates in the bottom half of the income distribution in Germany since the 2000s, which allowed for only moderately increasing consumption inequality, despite sharply rising income inequality. We combine survey data on household consumption with our own representative survey on the visibility and status relevance of various spending categories to test for upwards directed social status comparisons as an explanation of these trends. We find that non-rich households shift their income allocations towards more visible and status relevant areas of consumption when incomes at the top rise relative to their own. Renter households offset higher status consumption by reducing expenditures on other consumption components. In contrast, homeowners maintain higher status-oriented expenditures, particularly regarding housing, by considerably reducing their saving rates.

Keywords: Personal Income Distribution; Status Concerns; Household Consumption; Homeownership (search for similar items in EconPapers)
JEL-codes: D1 D31 E21 R21 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2023
New Economics Papers: this item is included in nep-eur and nep-hme
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Income inequality, household consumption and status competition in Germany (2023)
Working Paper: Income inequality, household consumption and status competition in Germany (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:imk:wpaper:219-2023

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