Unemployment, Retirement and Female Labor Market Participation and Income Inequality: A Decompositing Analysis for Germany

Abstract

This paper employs unvariate and multivariate inequality decompositions by subgroup in order to investigate how changes in unemployment, retirement and female labor market participation are related to changes of income inequality in Germany. The results suggest that a considerable share of the inequality increase in East Germany between 1990 to 1995 can be explained by compositional effects of these variable. The corresponding analysis for East Germany shows that the less pronounces changes in these variables played only a minor role for the increase in inequality in West Germany from 1985 to 1995. This paper also provides some stylized facts about the incidence of unemployment, retirement and female labor supply for both parts of the country.