Inflation and wealth accumulation of young German households: Evidence from SOEP panel data (2015?2022)

This paper summarizes the main findings of the dissertation on the financial impact of inflation on the wealth of young adults in Germany in the period 2015-2022. The aim is to present the key findings in a scientific article that covers all essential aspects and is suitable for publication in a specialist journal. The analysis is based on extensive data from the German Socio-Economic Panel (SOEP), supplemented by macroeconomic information from the Deutsche Bundesbank, the Federal Statistical Office and international organizations. Fixed-effects panel regressions are used to examine how inflation shocks influence the savings and investment behavior of younger and older households. The study shows that wealth inequality between younger and older households was already high during the low-inflation phase and worsened further as a result of the sharp price increases from 2021. The study focuses on the central hypotheses; that inflation significantly inhibits wealth accumulation among young adults. The empirical results only partially support these assumptions. Although young households suffer real losses in value, a heterogeneous adjustment can be identified: Well-qualified young people with higher incomes invest more in tangible assets, while financially weaker groups reduce their savings and prefer consumption. The paper concludes with an outlook on political measures to strengthen the financial resilience of young generations.