Housing expenditures and income inequality


Dustmann, Christian ; Fitzenberger, Bernd ; Zimmermann, Markus


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URL: https://ub-madoc.bib.uni-mannheim.de/47725
URN: urn:nbn:de:bsz:180-madoc-477252
Document Type: Working paper
Year of publication: 2018
The title of a journal, publication series: ZEW Discussion Papers
Volume: 18-048
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: D31 , R21,
Keywords (English): Income inequality , housing expenditures
Abstract: In this paper, we show that, in terms of real disposable income, changes in housing expenditures dramatically exacerbate the trend of income inequality that has risen sharply in Germany since the mid-1990s. More specifically, whereas the 50/10 ratio of net household income increases by 22 percentage points (pp) between 1993 and 2013, it increases by 62 pp for income net of housing expenditures. At the same time, the income share of housing expenditures rises disproportionally for the bottom income quintile and falls for the top quintile. Factors contributing to these trends include a decline in the relative costs of homeownership versus renting, changes in household structure, and residential mobility toward larger cities. Younger cohorts spend more on housing and save less than older cohorts did at the same age, with possibly negative consequences for wealth accumulation, particularly for those at the bottom of the income distribution.

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Dustmann, Christian ; Fitzenberger, Bernd ; Zimmermann, Markus (2018) Housing expenditures and income inequality. Open Access ZEW Discussion Papers Mannheim 18-048 [Working paper]
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