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From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992-2001

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Author Info
Stefan Bach
Giacomo Corneo
Viktor Steiner

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Abstract

We analyze the distribution and concentration of market incomes in Germany in the period 1992 to 2001 on the basis of an integrated data set of individual tax returns and the German Socio-Economic Panel. The unique feature of this integrated data set is that it encompasses the whole spectrum of the population, from the very poor to the very rich. We find a modest increase in overall inequality of market incomes as measured by the Gini coefficient. However, we also document a substantial drop of median income and a remarkable income growth at the top 0.1% of the income distribution. The increase of income inequality was stronger in East Germany than in West Germany. In both regions, the income concentration process strongly benefited the economic elite, which we define as the richest 0.001% per-sons in the population. While the elite mainly obtains its income from business and capital, the income share that it receives in form of wage income is increasing.

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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers with number 51.

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Length: 27 p.
Date of creation: 2007
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Handle: RePEc:diw:diwsop:diw_sp51

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Related research
Keywords: Income distribution; top incomes; inequality;

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D33 - Microeconomics - - Distribution - - - Factor Income Distribution
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bjorn Gustafsson & Birgitta Jansson, 2007. "Top Incomes in Sweden during Three-Quarters of a Century: A Micro Data Approach," IZA Discussion Papers 2672, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Corneo, Giacomo, 2006. "Media capture in a democracy: The role of wealth concentration," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 37-58, January. [Downloadable!] (restricted)
  3. Stefan Bach & Giacomo Corneo & Viktor Steiner, 2005. "Top Incomes and Top Taxes in Germany," Discussion Papers of DIW Berlin 532, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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  4. Ian Dew-Becker & Robert J. Gordon, 2005. "Where Did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income," NBER Working Papers 11842, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Wolfgang Franz & Viktor Steiner, 2000. "Wages in the East German Transition Process: Facts and Explanations," German Economic Review, Blackwell Publishing, vol. 1(3), pages 241-269, 08. [Downloadable!] (restricted)
  6. Emmanuel Saez & Michael R. Veall, 2005. "The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence," American Economic Review, American Economic Association, vol. 95(3), pages 831-849, June. [Downloadable!]
  7. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," NBER Working Papers 11955, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U.S. Wage Inequality: Re-Assessing the Revisionists," NBER Working Papers 11627, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Anthony B. Atkinson & Wiemer Salverda, 2005. "Top Incomes In The Netherlands And The United Kingdom Over The 20th Century," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 883-913, 06. [Downloadable!] (restricted)
  10. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2001-2), pages 1-92. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mathias Sommer, 2008. "Understanding the trends in income, consumption and wealth inequality and how important are life-cycle effects?," MEA discussion paper series 08160, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  2. Michal Myck & Richard Ochmann & Salmai Qari, 2008. "Dynamics of Earnings and Hourly Wages in Germany," SOEPpapers 139, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
  3. Richard V. Burkhauser & Takashi Oshio & Ludmila Rovba, 2007. "How the Distribution of After-Tax Income Changed over the 1990s Business Cycle: A Comparison of the United States, Great Britain, Germany and Japan," SOEPpapers 35, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
  4. Nicola Fuchs-Schündeln & Dirk Krueger & Mathias Sommer, 2009. "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries," NBER Working Papers 15059, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Sommer, Mathias, 2008. "Understanding the trends in income, consumption and wealth inequality and how important are life-cycle effects?," Sonderforschungsbereich 504 Publications 08-12, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
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