Do housing costs eat up all regional income disparities?

Larissa Klick and Sandra Schaffner

VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy from Verein für Socialpolitik / German Economic Association

Abstract: There exists empirical evidence for Germany that income inequality has increased. Further, development of housing prices is quite heterogeneous between regions. In this paper we analyze regional inequality regarding purchasing power per capita. By contrast to the existing literature we apply comprehensive data on the 1x1 km level. Consequently, this very precise delineation gives much better insights into regional disparities also below the level of administrative borders. In accordance with the existing literature we cannot observe increasing regional disparities. Further, first results indicate that there is a strong correlation between purchasing power and housing costs. The regional disparities will be described via inequality measurements and its decomposition. By a strong positive correlation between the price index for house purchases (RWI-GEO-REDX) and purchasing power, a dilution of regional purchase power can be found when taking real estate prices into account. Regional disparities vanish according to the analysis of the small-scale data.

Keywords: Regional Disparities; Housing prices (search for similar items in EconPapers)
JEL-codes: J31 R23 R31 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc19:203621

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