Lifetime Earnings Inequality in Germany

Fifth Meeting of the Society for the Study of Economic Inequality (ECINEQ)
Bari, Italien, 22.07.2013 - 24.07.2013

Lifetime Earnings Inequality in Germany
Timm Bönke, Giacomo Corneo, Holger Lüthen

German social security records show that intra-generational lifetime earnings inequality is about two-thirds of the corresponding inequality of annual earnings. Within cohorts, mobility in the distribution of yearly earnings is substantial at the beginning of the life cycle, decreases afterwards and virtually vanishes after age forty. We detect a striking secular rise of intra-generational inequality in lifetime earnings: West-German men born in the early 1960s are likely to experience about 85 % more lifetime inequality than their fathers. In contrast, both short-term and long-term intra-generational mobility are stable. Longer unemployment spells of workers at the bottom of the distribution of younger cohorts contribute to explain 20 to 40 % of the overall increase in lifetime earnings inequality.
JEL-Classification: D31;D33;H24
Earnings Distribution, Lifetime Inequality, Intra-generational Mobility