Low Income Inequality, High Wealth Inequality. The Puzzle of the Rhineland Welfare States

Number: 
50
Author: 
van Bavel, B. and Frankema, E.

Inequality studies tend to assume a positive correlation between income and wealth inequality. We doubt whether this holds for Rhineland welfare states as they seem to combine low income inequality with high wealth inequality levels. We hypothesize that publicly funded life-time income security, which is so typical for Rhineland welfare states, enhances private debt creation, while the redistributive taxes required to finance this system are targeting income rather than wealth.