The Changing Profile of Poverty in Germany after Unification: Cross-Section and Panel Views

Abstract

We compare poverty among former East and West Germans and foreign guest workers in 1992 and 1996 using data from the German Socio-Economic Panel (GSOEP). We find reversals in poverty rankings between former East Germans and foreign guest workers using headcount ratio and a Sen poverty index. With the more comprehensive Sen measure, we find convergence in poverty between the former East and West Germans. A probit analysis uncovers the changing characteristics of the poor over time. A longitudinal analysis of income sources for former East Germans who were poor in 1992 reveals alternative escape routes from poverty.