Polarization of Time and Income – A Multidimensional Analysis for Germany

A growing polarization of society accompanied by an erosion of the middle class is receiving
increasing attention in recent German economic and social policy discussion. Our study
contributes to this discussion in two ways: First, on a theoretical level we propose extended
multidimensional polarization indices based on a CES-type well-being function and present a
new measure to multidimensional polarization, the mean minimum polarization gap 2DGAP.
This polarization intensity measure provides transparency with regard to each single attribute,
which is important for targeted policies, while at the same time respecting their
interdependent relations. Second, in an empirical application time is incorporated, in addition
to the traditional income measure, as a fundamental resource for any activity. In particular,
genuine personal leisure time will account for social participation in the sense of social
inclusion/exclusion and Amartya Sen’s capability approach.
Instead of arbitrarily choosing the attribute parameters in the CES well-being function, the
interdependent relations of time and income are evaluated by the German population. With
the German Socio-Economic Panel (GSOEP) and detailed time use diary data from the
German Time Use Survey (GTUS) 1991/92 and 2001/02, we quantify available and extended
multidimensional polarization measures as well as our new approach to measuring the
polarization of the working poor and affluent in Germany.
There are three prominent empirical results: Genuine personal leisure time in addition to
income is an important and significant polarization attribute. Compensation is of economic
and statistical significance. The new minimum 2DGAP approach reveals that multidimensional
polarization increased in the 1990s in Germany.