Differences in income sources of the elderly in East and West Germany: evidence from NTA

Fanny Kluge, Max Planck Institute for Demographic Research

For some decades the income sources of elderly people in Germany have been dominated by public pensions. This is especially true for the former eastern German pensioners. With the Reunification, eastern Germans experienced an adaption to the Western German social insurance system. They exclusively rely on public transfers whereas western pensioners accumulated additional assets. Furthermore among former eastern Germans age 45+, the unemployment rates are significantly higher than their western German counterparts and thus the transfer dependency is higher. Intragenerational and intergenerational redistribution through asset holding or labor taxes result in considerable interstate monetary flows. This project seeks to quantify the differences in public transfers and asset holding in the East and West applying the National Transfer Account method. Although the wealth differences remain immense, we seek to identify a convergence of eastern German elderly towards the western Germans by estimating NTAs for 1990, 2003 and the years in between.