The article gives an overview of the current development of old-age pover ty in Germany and classifies widely discussed concepts for the reform of statutory pension insurance. Although current indicators generally point to an increase in old-age poverty, the empirical data show no growth at present in poverty risk for persons aged 65 and older. However, it is expected that the income position of older people will be worsen due to the declining pension payments of new retirees and the increase in discontinuous employment trajectories as well as the insufficient spread in private old age provision.
One of the reforms discussed for preventing rising poverty risks in old age is to consider life expectancy in the pension formula. This appears to be a promising means of reducing inequality within the group of pensioners. The implicit redistribution within the statutory pension system due to the empirically well-known correlation between living standards and life expectancy will decrease, and the equivalence principle can be strengthened.
In this article, we discuss and analyse poverty in Germany from a longitudinal perspective. Using data from the German Socio-Economic Panel Study (SOEP), we first show that the general poverty rate in Germany has constantly increased since the late 1990s. Shifting to a life-course perspective, we show that not only socio-structural characteristics have a strong impact on the poverty risk, but also critical life-events. While focusing on dynamics of poverty within individual life-courses, it appears that incidents like formation of a 'new household, birth of a child and separation from partner are associated with an immediate increase of the poverty risk. The event of becoming unemployed stands particularly out. Comparing longitudinal and fixed-effects approaches on the one hand with simple cross-sectional procedures on the other, our analyses finally emphasises that cross-sectional analyses are not sufficient to fully understand or to explain poverty. Therefore, our study can be interpreted as a claim to make stronger use of the benefits of longitudinal data in the context of poverty research.
We provide a concise introduction to a household-panel data infrastructure that provides the international research community with longitudinal data of private households in Germany since 1984: the German Socio-Economic Panel (SOEP). We demonstrate the comparative strength of the SOEP data in answering economically-relevant questions by highlighting its diverse and impactful applications throughout the field.