Abstract As simple as it is, results describing the world are heavily dependent on the quality of the underlying data. One of the very crucial variables in microanalytical analyses of well-being and human resources is income. The more, when the situation of the self-employed is regarded. This paper focus on the distribution of income based on very sound data: the German Income Tax Statistic (Einkommensteuerstatistik) 1992. New is the actual possibility to use for the first time such a sound microdatabase to analyze the self-employed in particular: a 100.000 microdata sample of the population wide German Income Tax Statistic. New is the comparison between income from dependent and self-employed work with emphasis on the entrepreneurs and professions, and new is the indepth decomposition inequality analysis of the aggregated groups and of the single professions based on an inequality generalized entropy decomposition approach. One overall striking result is: the occupational status as an employee, entrepreneur or as a profession with its connected low between inequality share is by far not the overall driving factor to ‘explain’ the overall income distribution and inequality picture of the re-unified Germany; it is the within group inequality which counts in particular.
Credit Constraints, Idiosyncratic Risks, and Wealth Distribution in a Heterogeneous Agent Model
(2007)
This paper examines the effects of credit market imperfections and idiosyncratic risks on occupational choice, capital accumulation, as well as on the income and wealth distribution in a two sector heterogeneous agent general equilibrium model. Workers and firm owners are subject to idiosyncratic shocks. Entrepreneurship is the riskier occupation. Compared to an economy with perfect capital markets, we find for the case of serially correlated shocks that more individuals choose the entrepreneurial profession in the presence of credit constraints, and that the fluctuation between occupations increases too. Workers and entrepreneurs with high individual productivity tend to remain in their present occupation, whereas low productivity individuals are more likely to switch between professions. Interestingly, these results reverse if we assume iid shocks, thus indicating that the nature of the underlying shocks plays an important role for the general equilibrium effects. In general, the likelihood of entrepreneurship increases with individual wealth.