Job loss among rich and poor in the United States and Germany: Who loses more income?

This article compares household income losses after involuntary job loss between household income quintiles in the United States and Germany. I argue that income trajectories after job loss vary between social strata in country-specific ways because of differences in the labor market, the family and the welfare state. Using panel data from the Panel Study of Income Dynamics and the German Socio-Economic Panel, I calculate household income after job loss for each household income quintile. The results show that job loss in the United States has the most severe effect on the poorest quintile whereas in Germany, the middle quintiles lose most after job loss. My analysis reveals that this is due to differences in the factors that buffer income losses between the strata: In both countries, the lower quintiles have the highest losses in earnings and family income support is comparatively low among them. In Germany, the welfare state ameliorates this because it has a higher impact on the lower quintiles than on the upper quintiles. In the United States on the other hand, the welfare state has a more equal impact among the quintiles and hence does not offset the disadvantages of the lower quintiles that the labor market and the family generate.