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Does Work Always Pay in Germany?

Author

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  • Scheicher Christoph

    (Universität zu Köln, Cologne,Köln, Germany)

Abstract

Income redistribution in Germany is the result of a combination of several redistribution instruments: there is a complex income tax law, different obligatory social insurances and supplementary benefits. This paper estimates income redistribution by quantile regression, using German EVS data. Two results are obtained: income after redistribution does not always increase in line with income before redistribution, i.e. for people with a low income before redistribution, it does not make sense to increase their efforts, since more work means less earnings. Further, an increasing redistribution rate for higher incomes is not always observable from the data.

Suggested Citation

  • Scheicher Christoph, 2010. "Does Work Always Pay in Germany?," German Economic Review, De Gruyter, vol. 11(3), pages 266-277, August.
    • Handle: RePEc:bpj:germec:v:11:y:2010:i:3:p:266-277
    DOI: 10.1111/j.1468-0475.2009.00481.x
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