Germany

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Overview of Trends of Economic Inequality in Germany

 

Has the dispersion of earnings been increasing in recent decades?Yes, top decile has risen from 150 per cent of median in 1950s to 190 per cent at end of 2000s.
Has overall inequality increased in recent years?Yes, the Gini coefficient in 2010 was 3 percentage points higher than in 1998.
Have there been periods when overall inequality fell for a sustained period?Overall inequality (and poverty) fell over the 1960s and 1970s.
Has poverty been falling or rising in recent decades?Poverty rate increased from 10 per cent to 15 per cent between 1998 and 2010.
Has there been a U-pattern for top income shares over time?No, top gross income shares were relatively stable over post-war period.
Has the distribution of wealth followed the same pattern as income?Yes, Gini coefficient of individual wealth fell 10 percentage points from 1973 to 1993 and then began to rise.
Additional noteworthy features

Sources and References

Sources for the historical data series:

Overall inequality: Gini coefficient of unequivalised disposable income, series 1, from DIW (1973, page 224); Gini coefficient of equivalised (modified OECD scale) disposable household income, series 2, for all persons in private households for all Germany (West Germany from 1984 to 1990) from SOEPmonitor 1984-2011, page 86, published on the website of DIW Berlin; note that the data are based on information collected in the German Socio-Economic Panel on annual income (preceding year, so that the 2009 data are from the 2010 survey), linked backwards at 1983 to data from the EVS (Income and Expenditure Survey) for West Germany from Becker (1997, Tabelle 1) and Hauser and Becker (2001, page 89).

Top income shares: Series 1: shares of top 1 per cent and top 0.1 per cent in total gross income (excluding capital gains) covering Prussia before 1919, the German Reich from 1925 to 1938, and West Germany for 1950, from WTID (based on work of Dell, 2007); Series 2 from 1950 for shares of top 1 per cent and top 0.1 per cent in total gross income (including capital gains) also from WTID covering West Germany until 1990 and thereafter Germany.

Poverty: percentage of individuals in households with equivalised (original OECD scale) disposable household income below 50 per cent of the mean for all persons of German nationality in private households for West Germany, from Becker (1997, Tabelle 2) ; percentage of individuals in households with equivalised (modified OECD scale) disposable household income below 60 per cent of the median for all persons in private households for all Germany (West Germany from 1984 to 1990) from SOEPmonitor 1984-2011, page 94, published on the website of DIW Berlin; note that the data are based on information collected in the German Socio- Economic Panel on annual income (preceding year, so that the 2009 data are from the 2010 survey).

Individual earnings: Series 1 covering the German Reich from Atkinson (2008, Appendix H, Table H.6); Series 2 covering West Germany from 1949 to 1991 and Germany till 1995 from Atkinson (2008, Appendix H, Table H.3); Series 3 from OECD iLibrary, Employment and Labour Market Statistics, Gross earnings decile ratios.

Wealth: Gini coefficient for individual wealth covering Germany from Frick, Grabka and Hauser (2010, Tabelle 2.6), linking the figure for 2007 at 2002/3 to the earlier series (estimates for 1973 to 1993 relate to West Germany).

References:

  • Atkinson, A B, 2008, The changing distribution of earnings in OECD countries, Oxford University Press, Oxford.
  • Becker , I, 1997, “Die Entwicklung der Einkommensverteilung und der Einkommensarmut in den alten Bundesländern von 1962 bis 1988” in I Becker and R Hauser, editors, Einkommensverteilung und Armut , Campus, Frankfurt.
  • Dell, F, 2007, “Top incomes in Germany throughout the twentieth century: 1891- 1998” in A B Atkinson and T Piketty, editors, Top incomes over the twentieth century, Oxford University Press, Oxford.
  • DIW (Deutsche Institut für Wirtschaftsforschung), 1973, “Einkommensverteilung und –schichtung der privaten Haushalte in der Bundesrepublik Deutschland 1950 bis 1970”, Wochenbericht, No 25, Berlin.
  • Frick, J R, Grabka, M M and Hauser, R, 2010, Die Verteilung der Vermögen in Deutschland, Edition Sigma, Berlin.
  • Hauser, R and Becker, I, 2001, Einkommensverteilung im Querschnitt und im Zeitverlauf 1973-1998, Bundesministerium für Arbeit und Sozialordnung, Bonn.
  • SOEP Group. 2013. SOEP 2011 – SOEPmonitor Person 1984-2011 (SOEP v28). SOEP Survey Papers 119: Series E. Berlin: DIW/SOEP