Wiegand, Johannes; (2002) Four essays on applied welfare measurement and income distribution dynamics in Germany 1985-1995. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This thesis focuses on several aspects of the German income distribution. Chapter 1 analyses aggregate changes in poverty and how these relate to income distribution dynamics. First, it documents the development of poverty and various other income distribution statistics between 1985 and 1995. Then, it builds on growth-income distribution decompositions to split poverty changes into nine effects that interact elements of income distribution changes (mean income growth, inequality changes, and other changes affecting poverty) with changes in aspects of poverty (the proportion poor, the average shortfall of poor incomes from the poverty line, and within-poverty inequality). The technique is applied to West Germany between 1985 to 1995, and to East Germany between 1990 and 1995. Chapter 2 moves on to a more disaggregated level. First, it measures East and West Germany's poverty structure over time, testing how East Germany's pattern after unification converged towards the very stable West German poverty structure. Then, it uses and extends shift-share decompositions of poverty changes that distinguish between the poverty impact of changes of the population structure (e.g., changes in unemployment or household composition) from poverty changes within subgroups. Chapter 3 works out the conditional correlation of poverty with individual and household characteristics. It reviews earlier attempts that deal with this issue, in particular tobit-type models that are shown to be inadequate in most cases. The technique suggested here avoids these shortcomings. Moreover, it has the added virtue of being simple: it just requires two mean regressions and a summing up procedure. The technique is applied to a sample of prime age West Germans from 1991 to 1995. Chapter 4, finally, estimates intergenerational mobility between German fathers and sons. It finds that the German mobility level exceeds considerably what is typically found in studies for the US or the UK, indicating (perhaps surprisingly) more equality of opportunity in Germany. This result holds also when nonlinear and nonparametric specifications are used rather than the standard log-linear specification.

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