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Per Capita Income of the SOEP Household · 2009-02-27

I could lay my hands on a dataset recently, of which I have reason to believe that it is a 2007 SOEP dataset. This is a nice piece to play with. First I had a look at the income variables of the sample households. Divided by the number of persons in the household I got the per capita income of the SOEP households. One thing is interesting. SOEP knows a pre government income and a post government income. So income before and after tax and transfer payments. Now watch this:

Distribution of Income per capita in the SOEP

The yellow boxplots depict the distribution of pre gov incomes of the last eleven years. You can see that the gap between the well off and the less well off widened remarkably in the last few years. This is probably the main result of the agenda2010 reforms. Note the widening of the distribution in the lower half of the income distribution in recent years.

Now the interesting point is that Germany seems to do a great job in keeping the post gov incomes steady. See the orange boxplots which do not show a widening of the income distribution. Question is: What do we do here? We introduce large reforms to create a low price work segment, hence a low income segment within the population, and then we cancel out the effects by transferring income? Weird, ain't it?

Difference of the Median Household per capita income pre and post gov transfers

One last point was interesting having a first glance at the SOEP data. The median income, the per capita income of 'middle' household, pre gov used to be higher then the median post gov income. That means the middle SOEP household was a net payer to the german transfer systems. Since 2005 (refer to the pic above) the middle SOEP household is a net gainer from german transfer systems. Is this a good or a bad thing?

(analysis done with r-project.org)


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