Changes in working hours are driving earnings inequality

by Mattis Beckmannshagen and Carsten Schröder

According to Socio-Economic Panel (SOEP) data, inequality in gross monthly earnings in Germany increased significantly between 1993 and 2003 and has been stagnating at a high level since 2008. As this Weekly Report shows, the increase is not being driven by higher hourly wage inequality, but rather by working hours: In recent years, employees with a high hourly wage work more than previously compared to employees with a low hourly wage. In particular, this applies to two groups whose share of the workforce has increased significantly in recent years: employed women and service sector employees. Had employees been able to work their desired number of hours, the rise in inequality would have been more moderate. A better work-life balance and more opportunities to increase working hours in the low-wage sector could counteract this trend.

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Year of publication:	2022
Authors:	Beckmannshagen, Mattis ; Schröder, Carsten
Published in:	DIW weekly report : economy, politics, science : a policy bulletin from the German Institute for Economic Research. - Berlin : DIW, ISSN 2568-7697, ZDB-ID 2916740-1. - Vol. 12.2022, 32/34, p. 195-201
Subject:	Earnings inequality \| Working hours \| Hours mismatch \| Part-time work \| Decomposition analysis \| Arbeitszeit \| Working time \| Einkommensverteilung \| Income distribution \| Lohnstruktur \| Wage structure \| Teilzeitarbeit \| Part-time employment \| Arbeitsangebot \| Labour supply \| Arbeitszeitgestaltung \| Working time arrangement \| Dekompositionsverfahren \| Decomposition method