Income Comparisons Among Neighbours and Satisfaction in East and West Germany |
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Authors: | Gundi Knies |
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Institution: | (1) Institute for Social and Economic Research, University of Essex, Colchester, Essex, UK |
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Abstract: | A series of studies have suggested that changes in others’ income may be perceived differently in post-transition and capitalist
societies. This paper draws on the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population
characteristics in very tightly drawn neighbourhoods to investigate whether reactions to changes in their neighbours’ income
divide the German nation. We find that the neighbourhood income effect for West Germany is negative (which is in line with
the ‘relative income’ hypothesis) and slightly more marked in neighbourhoods that may be assumed to be places where social
interactions between neighbours take place. In contrast, the coefficients on neighbourhood income in East Germany are positive
(which is consistent with the ‘signalling’ hypothesis), but statistically not significant. This suggests not only that there
is a divide between East and West Germany, but also that neighbours may not be a relevant comparison group in societies that
have comparatively low levels of neighbouring. |
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Keywords: | |
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