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The ‘German job miracle’ and its impact on income inequality: a decomposition study

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  • Mühlhan, Jannek

    (Destatis)

Abstract

"In the last 15 years before the COVID-19 crisis, Germany has experienced a strong and continuous increase in employment - the ‘German job miracle’. During this period, income inequality, which had previously increased sharply, remained relatively stable. This paper analyzes the impact of employment changes on disposable income inequality between 2004 and 2015 and gives an answer to the question why inequality remained constant despite the dramatic increase in employment. It is the first study to examine the effect of changing labor supply patterns due to changes in policies, wages and preferences, as well as the role that labor market constraints have played for inequality of disposable income. It finds that inequality would have increased further due to a transforming population structure, but increasing employment and policy changes almost completely offset this development. The results show that employment growth due to the reduction of labor market constraints has been more important in slowing down the increase in inequality than changes in labor supply." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Mühlhan, Jannek, 2022. "The ‘German job miracle’ and its impact on income inequality: a decomposition study," IAB-Discussion Paper 202216, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:202216
    DOI: 10.48720/IAB.DP.2216
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    Keywords

    Bundesrepublik Deutschland ; IAB-Open-Access-Publikation ; Auswirkungen ; Beschäftigungsentwicklung ; Bevölkerungsstruktur ; Einkommensverteilung ; Entwicklung ; Hartz-Reform ; Lohnstruktur ; private Haushalte ; soziale Ungleichheit ; Sozialpolitik ; Steuerpolitik ; Arbeitskräfteangebot ; Arbeitsmarktentwicklung ; Arbeitsmarktpolitik ; verfügbares Einkommen ; 2004-2015;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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