Dynamics of Earnings and Hourly Wages in Germany

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in SOEPpapers on Multidisciplinary Panel Data Research at DIW BerlinThis series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.The decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly. AbstractThere is by now a vast number of studies which document a sharp increase in crosssectional wage inequality during the 2000s. It is often assumed that this inequality is of a "permanent nature" which in turn is used as an argument calling for government intervention. We examine these claims using a fully balanced panel of full-time employed individuals in Germany from the German Socio-Economic Panel for the years 1994-2006. In line with previous studies, our sample shows sharply rising inequality during the 2000s. Applying covariance structure models, we calculate the fraction of permanent and transitory wage and earnings inequality. From 1994 on, permanent inequality increases continuously, peaks in 2001 and then declines in subsequent years. Interestingly the decline in the permanent fraction of inequality occurs at the time of most rapid increases in cross-sectional inequality. It seems therefore that it is primarily the temporary and not the permanent component which has driven the strong expansion of cross-sectional inequality during the 2000s in Germany.

German Male Income Volatility 1984 to 2008: Trends in Permanent and Transitory Income Components and the Role of the Welfare State

“…These trends are consistent with those identified by Myck et al (2008). Our evidence thus far is not indicative of growing insecurity in Germany.…”

“…This approach is very appealing for its data requirements in terms of panel structure. In order to derive the measures needed, only two individual observations are necessary and, thus, sample size is fairly large compared to more technically sophisticated studies utilizing the auto-covariance matrix of earnings (for Germany see Biewen, 2005, andMyck et al 2008). In addition, Moffitt and…”

“…Myck et al (2008) The extensive redistributive intervention of a welfare state combined with a safety-net provided by families can contribute to smooth the income variation and stabilize consumption. In the face of rising earnings volatility the stabilizing intervention may lead to a Pareto improvement and is hence efficiency enhancing.…”

Household Savings Decision and Income Uncertainty

“…From now on, we differentiate the analysis by household type (h). We further allow for un-11 Myck, Ochmann, and Qari (2009) apply similar error components models for the variance of individual labor earnings as well as hourly wages of full-time employed male employees in Germany. 12 Skinner (1988) uses occupation as a proxy for risk aversion when quantifying the relevance of precautionary savings.…”

Empirische Forschungsvorhaben Zur Alterssicherung. Einige Kritische Anmerkungen Zur Aktuellen Datenlage

“…81 Vgl. Kohli et al (2006), Künemund/Fachinger (2010), Künemund et al (2010b), , Myck et al (2008), Suntum et al (2010). 82 Vgl.…”