The Relationships between Annual Inequality, and Subannual Inequality and Mobility : Evidence from Germany

We study the relationships, for the case of Germany, between inequality in the annual earnings distribution, and subannual inequality and mobility during the course of the year. The study builds on an exact decomposition framework outlined in Wodon and Yitzhaki (2003), and in Yitzhaki and Wodon (2004). The study shows that inequality in the subannual monthly earnings distributions is significantly higher than in the annual earnings distribution. Further, it shows that the mobility component of the decomposition, as measured by Gini correlation coefficients, changes over the observation period. That it changes makes it difficult to predict the impact of the income accounting period on inequality in a more general context. Thus, in distributional analyses it is of paramount importance to use income data from a uniform accounting period