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

  • Bach, Stefan
  • Corneo, Giacomo
  • Steiner, Viktor

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% persons 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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6251.

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Date of creation: Apr 2007
Date of revision:
Handle: RePEc:cpr:ceprdp:6251
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  1. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U. S. Wage Inequality: Re-Assessing the Revisionists," Harvard Institute of Economic Research Working Papers 2095, Harvard - Institute of Economic Research.
  2. Corneo, Giacomo, 2005. "Media capture in a democracy: the role of wealth concentration," Discussion Papers 2005/1, Free University Berlin, School of Business & Economics.
  3. Franz, Wolfgang & Steiner, Viktor, 1999. "Wages in the East German transition process: facts and explanations," ZEW Discussion Papers 99-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  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.
  5. Gustafsson, Björn Anders & Jansson, Birgitta, 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).
  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.
  7. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, vol. 96(2), pages 200-205, May.
  8. Stefan Bach & Giacomo Corneo & Viktor Steiner, 2006. "Top Incomes and Top Taxes in Germany," CESifo Working Paper Series 1641, CESifo Group Munich.
  9. 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(2), pages 1-92.
  10. 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.
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