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How Income Inequality Changed in Germany Following Reunification: An Empirical Analysis Using Decomposable Inequality Measures

Aufsätze referiert extern - Web of Science

Johannes Schwarze

In: The Review of Income and Wealth 42 (1996), 1, S. 1-11


This paper analyzes how inequality in Before and After Government income has changed in Germany since reunification using the 1990 through 1992 waves of the German Socio-Economic Panel. A Theil decomposable inequality index is used to measure inequality in Germany and in its eastern and western states. Massive public transfers from west to east have narrowed the east-west income gap, substantially offset the rise in income inequality from private sources, and lowered overall inequality in the western states. The net result of this policy has been a drop in After Government income inequality in Germany between 1990 and 1992.