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Income Inequality in Germany Stagnating over the Long Term, But Decreasing Slightly during the Coronavirus Pandemic

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  • Markus M. Grabka

Abstract

Both wages and needs-adjusted household income increased by ten percent between 2013 and 2018, benefiting all income groups. Wage inequality has been declining for many years and has now again reached the level of the early 2000s. At the same time, the low-wage sector shrank by two percentage points. Household income inequality, in contrast, has hardly changed for many years and the low-income rate is stagnating. However, the share of people in Germany who are affected by severe material deprivation sank to a low level in a European comparison. Income inequality in Germany has declined slightly since the beginning of the coronavirus pandemic, but this is likely primarily due to incomes decreasing among the self-employed. However, the pandemic poses the risk that an increasing number of insolvencies and unemployed people will cause incomes to fall again across the board. Financial assistance for the self-employed and business owners should not be ended too early and its targeting should be readjusted.

Suggested Citation

  • Markus M. Grabka, 2021. "Income Inequality in Germany Stagnating over the Long Term, But Decreasing Slightly during the Coronavirus Pandemic," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 11(17/18), pages 125-133.
    • Handle: RePEc:diw:diwdwr:dwr11-17-1
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.817500.de/dwr-21-17-1.pdf
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    Citations

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    Cited by:

    1. Andrew E. Clark & Conchita D’Ambrosio & Anthony Lepinteur, 2021. "The fall in income inequality during COVID-19 in four European countries," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 489-507, September.
    2. Moritz Drechsel‐Grau & Andreas Peichl & Kai D. Schmid & Johannes F. Schmieder & Hannes Walz & Stefanie Wolter, 2022. "Inequality and income dynamics in Germany," Quantitative Economics, Econometric Society, vol. 13(4), pages 1593-1635, November.
    3. Stüber, Heiko & Grabka, Markus M. & Schnitzlein, Daniel D., 2023. "A tale of two data sets: comparing German administrative and survey data using wage inequality as an example," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-8.
    4. Braband, Carsten & Consiglio, Valentina Sara & Grabka, Markus M. & Hainbach, Natascha & Königs, Sebastian, 2022. "Disparities in Labour Market and Income Trends during the First Year of the COVID-19 Crisis – Evidence from Germany," IZA Discussion Papers 15475, Institute of Labor Economics (IZA).
    5. Michael Dauderstädt, 2022. "Coronabedingte Ungleichheit und Armut in Deutschland: Überschätzt oder unterschätzt? [The Rise of Inequality and Poverty in Germany During the Pandemic: False Alarm?]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(1), pages 64-66, January.
    6. Michael Dauderstädt, 2022. "International Inequality and the COVID-19 Pandemic," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 57(1), pages 40-46, January.
    7. A. Tidu, 2023. "Dissecting inequality: conceptual problems, trends and drivers," Working Paper CRENoS 202313, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

    More about this item

    Keywords

    Income inequality; poverty; SOEP;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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