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Trends in the German income distribution: 2005/06 to 2010/11

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  • Biewen, Martin
  • Ungerer, Martin
  • Löffler, Max

Abstract

We analyze the potential influence of a number of factors on the distribution of equivalized net incomes in Germany over the period 2005/2006 to 2010/11. While income inequality considerably increased in the years before 2005/2006, this trend was stopped after 2005/2006. Among many other factors, we consider the role of the employment boom and the development of inequality in wage incomes after 2005/2006. Our results suggest that, despite further increases in wage inequality, inequality in equivalized net incomes did not increase further after 2005/2006 because increased within-year employment opportunities compensated otherwise rising inequality in annual labour incomes. On the other hand, income inequality did not fall in a more marked way after 2005/2006 because also the middle and the upper part of the distribution benefitted from the employment boom. Other factors, such as changing household structures, population aging and changes in the tax and transfer system had no important effects on the distribution. Finally, we find little evidence that the distribution of equivalized net incomes was affected in any important way by the financial crisis and the subsequent great recession.

Suggested Citation

  • Biewen, Martin & Ungerer, Martin & Löffler, Max, 2016. "Trends in the German income distribution: 2005/06 to 2010/11," ZEW Discussion Papers 16-088, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:16088
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    Cited by:

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    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.

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    More about this item

    Keywords

    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

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