Journal Article

Earnings Inequality – Does the Accounting Period Matter?


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Publication Date

Under mild assumptions, Shorrocks (1978) has proved that measured inequality must decrease when the period over which income is measured, the accounting period, increases. The present work seeks to shed light on the quantitative size of this effect using a huge representative German database for the period 1975–2004. Our results indicate that the choice of the accounting period not only seriously affects the level of inequality. We can also show that the size of the effect varies over time.

Kiel Institute Expert


JEL Classification
D31, D63, O15