IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11838.html
   My bibliography  Save this paper

Top Incomes in Germany, 1871-2014

Author

Listed:
  • Bartels, Charlotte

    (DIW Berlin)

Abstract

This study provides new evidence on top income shares in Germany from the period of industrialization to the present. Income concentration was high in the nineteenth century, dropped sharply after World War I and during the hyperinflation years of the 1920s, and increased rapidly throughout the Nazi period beginning in the 1930s. Following the end of World War II, German top income shares returned to 1920s levels. The German pattern stands in sharp contrast to developments in France, the UK, and the US, where World War II brought a sizeable and lasting reduction in top income shares. Since the turn of the millennium, income concentration in Germany has been on the rise and is today among the highest in Europe. Regression analysis reveals that rising top income shares are positively associated with the capital share, trade and technological change.

Suggested Citation

  • Bartels, Charlotte, 2018. "Top Incomes in Germany, 1871-2014," IZA Discussion Papers 11838, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11838
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp11838.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Ferguson & Hans-Joachim Voth, 2008. "Betting on Hitler—The Value of Political Connections in Nazi Germany," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 101-137.
    2. Markus Jäntti & Stephen Jenkins, 2010. "The impact of macroeconomic conditions on income inequality," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(2), pages 221-240, June.
    3. Facundo Alvaredo & Emmanuel Saez, 2009. "Income and Wealth Concentration in Spain from a Historical and Fiscal Perspective," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 1140-1167, September.
    4. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    5. Thomas Piketty & Emmanuel Saez & Stefanie Stantcheva, 2014. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 230-271, February.
    6. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, Oxford University Press, vol. 129(1), pages 61-103.
    7. Austan Goolsbee, 2000. "What Happens When You Tax the Rich? Evidence from Executive Compensation," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 352-378, April.
    8. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 553-609.
    9. Rahlf, Thomas (Ed.), 2015. "Deutschland in Daten. Zeitreihen zur Historischen Statistik," EconStor Research Reports 124185, ZBW - Leibniz Information Centre for Economics.
    10. Bengtsson, Erik & Waldenström, Daniel, 2018. "Capital Shares and Income Inequality: Evidence from the Long Run," The Journal of Economic History, Cambridge University Press, vol. 78(3), pages 712-743, September.
    11. Stefan Bach, 2013. "Has German Business Income Taxation Raised too Little Revenue over the Last Decades?," Discussion Papers of DIW Berlin 1303, DIW Berlin, German Institute for Economic Research.
    12. Hardach, Gerd, 2017. "Sparen in der "Nullzinsphase". Privatanleger und der Kapitalmarkt in Deutschland im Ersten Weltkrieg," IBF Paper Series 02-17, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    13. Madsen, Jakob B., 2007. "Technology spillover through trade and TFP convergence: 135 years of evidence for the OECD countries," Journal of International Economics, Elsevier, vol. 72(2), pages 464-480, July.
    14. Anthony Atkinson & Thomas Piketty, 2010. "Top Incomes : A Global Perspective," PSE-Ecole d'économie de Paris (Postprint) halshs-00754875, HAL.
    15. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2009. "The long-run determinants of inequality: What can we learn from top income data?," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 974-988, August.
    16. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    17. 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, June.
    18. Emmanuel Saez, 2005. "Top Incomes in the United States and Canada Over the Twentieth Century," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 402-411, 04/05.
    19. 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.
    20. Atkinson, A. B. & Piketty, Thomas (ed.), 2010. "Top Incomes: A Global Perspective," OUP Catalogue, Oxford University Press, number 9780199286898.
    21. Fabien Dell, 2005. "Top Incomes in Germany and Switzerland Over the Twentieth Century," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 412-421, 04/05.
    22. Fabien Dell, 2005. "Top Incomes in Germany and Switzerland over the Twentieh Century," Post-Print hal-00813565, HAL.
    23. Bartels, Charlotte & Jenderny, Katharina, 2014. "The role of capital income for top incomes shares in Germany," Discussion Papers 2014/32, Free University Berlin, School of Business & Economics.
    24. Alan J. Auerbach, 1988. "Capital Gains Taxation in the United States: Realizations, Revenue, and Rhetoric," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 595-638.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Thomas Blanchet & Lucas Chancel & Amory Gethin, 2019. "How Unequal is Europe? Evidence from Distributional National Accounts, 1980-2017," World Inequality Lab Working Papers hal-02877000, HAL.
    2. Bartels, Charlotte & Kersting, Felix & Wolf, Nikolaus, 2021. "Testing Marx. Income Inequality, Concentration, and Socialism in Late 19th Century Germany," SocArXiv 5y9wf, Center for Open Science.
    3. Mares, Isabela & Queralt, Didac, 2020. "Fiscal innovation in nondemocratic regimes: Elites and the adoption of the prussian income taxes of the 1890s⁎," Explorations in Economic History, Elsevier, vol. 77(C).
    4. Charlotte Bartels & Carsten Schroeder, 2020. "The role of rental income, real estate and rents for inequality in Germany," Working Papers 7, Forum New Economy.
    5. Maria Gomez-Leon & Giacomo Gabbuti, 2021. "Wars, Depression, and Fascism: Income Inequality in Italy, 1900-1950," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 2104, Departamento de Economía - Universidad Pública de Navarra.
    6. Charlotte Bartels & Carsten Schroeder, 2020. "Income, consumption and wealth inequality in Germany: Three concepts, three stories?," Basic Papers 2, Forum New Economy.
    7. Advani, Arun & Summers, Andy, 2020. "Capital Gains and UK Inequality," The Warwick Economics Research Paper Series (TWERPS) 1260, University of Warwick, Department of Economics.
    8. 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.
    9. Giacomo Gabbuti, 2018. "Labour Shares and Income Inequality: Insights from Italian Economic History, 1895-2015," HHB Working Papers Series 13, The Historical Household Budgets Project.
    10. Bartels, Charlotte & Waldenström, Daniel, 2021. "Inequality and top incomes," GLO Discussion Paper Series 959, Global Labor Organization (GLO).
    11. Ashley Pullman & Britta Gauly & Clemens M. Lechner, 2021. "Short-term earnings mobility in the Canadian and German context: the role of cognitive skills," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-19, December.
    12. Gregori Galofre-Vila, 2021. "The Costs of Hyperinflation: Germany 1923," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 2101, Departamento de Economía - Universidad Pública de Navarra.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christoph A. Schaltegger & Christoph Gorgas, 2011. "The Evolution of Top Incomes in Switzerland over the 20th Century," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(IV), pages 479-519, December.
    2. Enrico Rubolino & Daniel Waldenström, 2019. "Trends and gradients in top tax elasticities: cross-country evidence, 1900–2014," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(3), pages 457-485, June.
    3. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," World Inequality Lab Working Papers hal-02876995, HAL.
    4. Katharina Jenderny, 2016. "Mobility of Top Incomes in Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(2), pages 245-265, June.
    5. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102834, London School of Economics and Political Science, LSE Library.
    6. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102814, London School of Economics and Political Science, LSE Library.
    7. Pawel Bukowski & Filip Novokmet, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," CEP Discussion Papers dp1628, Centre for Economic Performance, LSE.
    8. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," Working Papers hal-02876995, HAL.
    9. Thomas Piketty & Emmanuel Saez & Stefanie Stantcheva, 2014. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 230-271, February.
    10. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
    11. Bartels, Charlotte & Waldenström, Daniel, 2021. "Inequality and top incomes," GLO Discussion Paper Series 959, Global Labor Organization (GLO).
    12. Emmanuel Saez, 2017. "Taxing the Rich More: Preliminary Evidence from the 2013 Tax Increase," Tax Policy and the Economy, University of Chicago Press, vol. 31(1), pages 71-120.
    13. Boschini, Anne & Gunnarsson, Kristin & Roine, Jesper, 2017. "Women in Top Incomes – Evidence from Sweden 1974-2013," Working Paper Series 5/2017, Stockholm University, Swedish Institute for Social Research.
    14. Enrico Rubolino & Daniel Waldenström, 2020. "Tax progressivity and top incomes evidence from tax reforms," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(3), pages 261-289, September.
    15. Stefan Bach & Giacomo Corneo & Viktor Steiner, 2013. "Effective Taxation of Top Incomes in Germany," German Economic Review, Verein für Socialpolitik, vol. 14(2), pages 115-137, May.
    16. Julia Tanndal & Daniel Waldenström, 2018. "Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang," Economica, London School of Economics and Political Science, vol. 85(338), pages 232-265, April.
    17. Garbinti, Bertrand & Goupille-Lebret, Jonathan & Piketty, Thomas, 2018. "Income inequality in France, 1900–2014: Evidence from Distributional National Accounts (DINA)," Journal of Public Economics, Elsevier, vol. 162(C), pages 63-77.
    18. A. B Atkinson & Andrew Leigh, 2013. "The Distribution of Top Incomes in Five Anglo-Saxon Countries Over the Long Run," The Economic Record, The Economic Society of Australia, vol. 89, pages 31-47, June.
    19. Salvatore Morelli, 2018. "Banking crises in the US: the response of top income shares in a historical perspective," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 257-294, June.
    20. Reto Foellmi & Isabel Z. Martínez, 2017. "Volatile Top Income Shares in Switzerland? Reassessing the Evolution between 1981 and 2010," The Review of Economics and Statistics, MIT Press, vol. 99(5), pages 793-809, December.

    More about this item

    Keywords

    top incomes; income distribution; income inequality; welfare state; Germany;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:iza:izadps:dp11838. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.