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Housing Expenditures and Income Inequality

Christian Dustmann, Bernd Fitzenberger and Markus Zimmermann ()
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Markus Zimmermann: Humboldt-Universität zu Berlin

No 1816, CReAM Discussion Paper Series from Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London

Abstract: In this paper, we show that, in terms of real disposable income, changes in housing expenditures dramatically exacerbate the trend of income inequality that has risen sharply in Germany since the mid-1990s. More specifically, whereas the 50/10 ratio of net household income increases by 22 percentage points (pp) between 1993 and 2013, it increases by 62 pp for income net of housing expenditures. At the same time, the income share of housing expenditures rises disproportionally for the bottom income quintile and falls for the top quintile. Factors contributing to these trends include a decline in the relative costs of homeownership versus renting, changes in household structure, and residential mobility toward larger cities. Younger cohorts spend more on housing and save less than older cohorts did at the same age, with possibly negative consequences for wealth accumulation, particularly for those at the bottom of the income distribution.

Keywords: income inequality; housing expenditures (search for similar items in EconPapers)
JEL-codes: D31 R21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2018-10
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Related works:
Working Paper: Housing Expenditures and Income Inequality (2018) Downloads
Working Paper: Housing Expenditures and Income Inequality (2018) Downloads
Working Paper: Housing expenditures and income inequality (2018) Downloads
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