IDEAS home Printed from
   My bibliography  Save this article

Why Did Income Inequality in Germany Not Increase Further After 2005?


  • Biewen Martin

    (University of Tübingen, Tübingen, Germany)

  • Ungerer Martin
  • Löffler Max

    (University of Cologne, Cologne, Germany)


While income inequality in Germany considerably increased in the years before 2005, this trend stopped after 2005. We address the question of what factors were responsible for the break in the inequality trend after 2005. Our analysis suggests that income inequality in Germany did not continue to rise after 2005 for the following reasons. First, we observe that the general rise in wage inequality that explained a lot of the inequality increase before 2005, became less steep (but did not stop) after 2005. Second, despite further increases in wage inequality after 2005, inequality in annual labour incomes did not increase further after 2005 because increased within-year employment opportunities compensated otherwise rising inequality in annual labour incomes. Third, income inequality did not fall in a more marked way after 2005 because also the middle and the upper part of the distribution benefited from the employment boom after 2006. Finally, we provide evidence that the effect of a wide range of other factors that are often suspected to have influenced the distribution such as capital incomes, household structures, population ageing, changes in the tax and transfer system and the financial crisis of 2008 did not significantly alter the distribution after 2005.

Suggested Citation

  • Biewen Martin & Ungerer Martin & Löffler Max, 2019. "Why Did Income Inequality in Germany Not Increase Further After 2005?," German Economic Review, De Gruyter, vol. 20(4), pages 471-504, December.
  • Handle: RePEc:bpj:germec:v:20:y:2019:i:4:p:471-504
    DOI: 10.1111/geer.12153

    Download full text from publisher

    File URL:
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    File URL:
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Schank, Thorsten & Bossler, Mario, 2020. "Wage inequality in Germany after the minimum wage introduction," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224543, Verein für Socialpolitik / German Economic Association.
    2. Charlotte Bartels & Carsten Schröder, 2020. "Die Bedeutung von Mieteinkommen und Immobilien für die Ungleichheit in Deutschland," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(10), pages 741-746, October.
    3. Martin Biewen & Miriam Sturm, 2021. "Why a Labour Market Boom Does Not Necessarily Bring Down Inequality: Putting Together Germany’s Inequality Puzzle," SOEPpapers on Multidisciplinary Panel Data Research 1139, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Fan Meng & Peng Nie & Alfonso Sousa-Poza, 2023. "The intangible costs of overweight and obesity in Germany," Health Economics Review, Springer, vol. 13(1), pages 1-10, December.
    5. 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.
    6. Paolo Brunori & Guido Neidhöfer, 2021. "The Evolution of Inequality of Opportunity in Germany: A Machine Learning Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(4), pages 900-927, December.
    7. Niklas Isaak & Philipp Jäger & Robin Jessen, 2021. "Die Verteilung der Steuer- und Abgabenlast [The Distribution of the Tax and Social Security Burden]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(4), pages 284-289, April.
    8. Bernd Hayo, 2023. "Does the ECB’s Monetary Policy Affect Personal Finances and Economic Inequality? A Household Perspective from Germany," MAGKS Papers on Economics 202023, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Hayo, Bernd, 2023. "Does the ECB's monetary policy affect personal finances and economic inequality? A household perspective from Germany," Economic Modelling, Elsevier, vol. 129(C).
    10. Cardullo, Gabriele & Sechi, Agnese, 2023. "Local Labor Markets with Non-homothetic Preferences," IZA Discussion Papers 16533, Institute of Labor Economics (IZA).
    11. Charlotte Bartels & Carsten Schroeder, 2020. "The role of rental income, real estate and rents for inequality in Germany," Working Papers 7, Forum New Economy.
    12. Charlotte Bartels & Carsten Schroeder, 2020. "Income, consumption and wealth inequality in Germany: Three concepts, three stories?," Basic Papers 2, Forum New Economy.
    13. Lea Immel, 2021. "The Impact of Labor Market Reforms on Income Inequality: Evidence from the German Hartz Reforms," ifo Working Paper Series 347, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    14. Hayo, Bernd, 2021. "Does Quantitative Easing Affect People’s Personal Financial Situation and Economic Inequality? The View of the German Population," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242331, Verein für Socialpolitik / German Economic Association.
    15. Martin Biewen & Miriam Sturm, 2022. "Why a labour market boom does not necessarily bring down inequality: putting together Germany's inequality puzzle," Fiscal Studies, John Wiley & Sons, vol. 43(2), pages 121-149, June.
    16. Ramona Schmid, 2023. "Migration and wage inequality: a detailed analysis for German metropolitan and non-metropolitan regions [Migration und Lohnungleichheit: Eine detaillierte Analyse für Deutsche Metropol- und Nicht-M," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(1), pages 147-201, April.

    More about this item


    Income inequality; poverty;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:germec:v:20:y:2019:i:4:p:471-504. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.