Always Poor or Never Poor and Nothing in Between? Duration of Child Poverty in Germany

Abstract

We suggest a new parametric approach to estimate the extent of downward nominal wage rigidity in ten European countries between 1995 and 2001. The database used throughout is the User Data Base of the European Community Household Panel (ECHP). The proposed approach is based on the generalized hyperbolic distribution, which allows to model wage change distributions characterized by thick tales, skewness and leptokurtosis. Significant downward nominal wage rigidity is found in all countries under analysis, but the extent varies considerably across countries. Yearly estimates reveal increasing rigidity in Italy, Greece and Portugal, while rigidity is declining in Denmark and Belgium. The results imply that the costs of price stability differ substantially across Europe. Copyright 2009 The Authors. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd. 2009.

Analysis of wage flexibility across the Euro Area: evidence from the process of convergence of the labour income share ratio

“…For this reason, these countries still maintain a lack of wage flexibility that is detrimental to employment during an economic crisis. This result is in line with Behr and Pötter (2010) who detect an important wage rigidity in these countries. In spite of the last statement, there is no significant difference between the LISR of these countries and their long-run LISR since 2011.…”

Does downward nominal wage rigidity dampen wage increases?

“…As a consequence, approaches such as the normality approach by Borghijs (2001) and the symmetry approach by Card and Hyslop (1997) that assume a symmetric counterfactual wage change distribution and infer the shape of the lower tail of the counterfactual using the upper part of the wage change distribution are seriously flawed. Other approaches like the earnings-function approach by Altonji and Devereux (2000), the histogram-location approach by Kahn (1997), or the approach based on the generalized hyperbolic distribution by Behr and Pötter (2010) do not assume symmetry of the unconditional counterfactual wage change distribution. However, applications of these approaches also assume that DNWR does not affect higher percentiles of the real wage change distribution -an assumption which is challenged by our empirical results.…”

Changes in the Patterns of Poverty Duration in Germany, 1992–2009

“…The poverty status of individuals is derived from the constructed income variable according to the official definition of relative income poverty in the European Union—that is, a person is considered to be poor if his/her net equivalized household income is less than 60 percent of the median equivalized income in the corresponding country. Following the literature on poverty dynamics in Germany (see, inter alia, Groh‐Samberg, ; Fertig and Tamm, ; Grabka and Frick, ), we use a common poverty threshold for eastern and western parts of the country . The unit of analysis is individual because individuals can be followed over time even if they move between households.…”

“…While changes in the incidence and lengths of poverty spells over time have been analyzed for the U.K. (Jenkins and Rigg, ; Jenkins, ) and U.S. (Stevens, ; Card and Blank, ), no similar studies have been performed for Germany. Regarding the duration of poverty itself, the few works available in the field (Headey et al ., ; Krause, ; Biewen, ; Moll, ; Fertig and Tamm, ) cover the period prior to 2004, that is before the introduction of the most important social policy reforms. The evidence about what happened afterwards is limited and mainly based on descriptive analysis .…”