Real Wages in Germany: Numerous Years of Decline
Abstract
Net real wages in Germany have hardly risen since the beginning of the 1990s. Between 2004 and 2008 they even declined. This is a unique development in Germany-never before has a period of rather strong economic growth been accompanied by a decline in net real wages over a period of several years. The key reason for this decline is not higher taxes and social-insurance contributions, as many would hold, but rather extremely slow wage growth, both in absolute terms and from an international perspective. This finding is all the more striking in light of the fact that average employee education levels have risen, which would on its face lead one to expect higher wage levels. In contrast to the prevailing wage trend, income from self-employment and investment assets has risen sharply in recent years, such that compensation of employees makes up an ever shrinking percentage of national income. Inflation-adjusted compensation of employees as a share of national income reached a historic low of 61% in 2007 and 2008. As in previous recessions, however, investment income has been under greater downward pressure in recent months than wages.Download Info
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Article provided by DIW Berlin, German Institute for Economic Research in its journal Weekly Report.
Volume (Year): 5 (2009)
Issue (Month): 28 ()
Pages: 193-202
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Related research
Keywords: Development of wages in Germany;Find related papers by JEL classification:
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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As found by EconAcademics.org, the blog aggregator for Economics research:- Global imbalances â?? caused by the free market?
by Dirk in econoblog101 on 2010-11-18 09:35:44 - The German Model: Myths & Reality
by duncanseconomicblog in Duncan's Economic Blog on 2011-03-25 11:37:53 - English text of Novo article
by (author unknown) in Ferraris for all on 2012-02-22 10:49:22 - Germanys failing prosperity model
by (author unknown) in Ferraris for all on 2011-08-31 18:27:28 - Lauding the German labour market
by (author unknown) in Ferraris for all on 2011-08-05 15:43:37
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