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The impact of ageing on income inequality

Author

Listed:
  • Dr. Thomas Drosdowski

    (GWS - Institute of Economic Structures Research)

  • Britta Stöver

    (GWS - Institute of Economic Structures Research)

  • Dr. Marc Ingo Wolter

    (GWS - Institute of Economic Structures Research)

Abstract

The question whether ageing leads to more or less inequality is not easily answered. Different, in part opposed, effects can be identified that are sensible to reactions of private households, the implementation of political measures etc. To get a better idea of the effect of demographic change on the distribution of income in Germany we apply a scenario analysis using the macro-econometric input-output model INFORGE and the socio-economic module DEMOS. Different exogenously given population projections are applied to identify the structural and quantity effect of ageing on inequality of disposable incomes between household groups. In summary, the projected demographic change in Germany is likely to increase income inequality. Main driver is the disproportionate increase in wage income due to labour market shortages. While the quantity effect acts slightly equalising on income inequality, the structural effect definitely raises income inequality.

Suggested Citation

  • Dr. Thomas Drosdowski & Britta Stöver & Dr. Marc Ingo Wolter, 2015. "The impact of ageing on income inequality," GWS Discussion Paper Series 15-16, GWS - Institute of Economic Structures Research.
    • Handle: RePEc:gws:dpaper:15-16
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    References listed on IDEAS

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    Cited by:

    1. Shaik, Muhammad Raees & Goh, Soo Khoon & Wong, Koi Nyen & Law, Chee Hong, 2024. "Does population aging coexist with income inequality in the long run? Evidence from selected Asia-Pacific countries," Economic Systems, Elsevier, vol. 48(1).
    2. Naudé, Wim & Nagler, Paula, 2017. "Technological Innovation and Inclusive Growth in Germany," IZA Discussion Papers 11194, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    income inequality; ageing; socio-economic modelling;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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