Market, family, and state sources of income instability in Germany and theUnited States

The public tax and transfer mechanisms of the welfare state are important s ources of income stability for individuals and families. In comparisons of the stability of income in the United States and the states of the former W est Germany, we found that household income tends to be more stable in Germ any than in the United States. This disparity is partly due to greater turb ulence in labor earnings in the United States and partly due to the more ef fective public social insurance system in Germany. These differences, howev er, are tempered by mechanisms that amount to a private, family-based insur ance system in the United States, where, more so than in Germany, labor inc ome from other family members and other, nonlabor sources of private income provide considerable stability. (C) 2000 Academic Press.