The Distribution of National Income in Germany, 1992-2019

58 Pages Posted: 9 Dec 2024

See all articles by Stefan Bach

Stefan Bach

German Institute for Economic Research (DIW Berlin)

Charlotte Bartels

German Institute for Economic Research (DIW Berlin) - German Socio Economic Panel

Theresa Neef

Halle Institute for Economic Research; World Inequality Lab, Paris School of Economics

Date Written: November 29, 2024

Abstract

This paper analyzes the distribution and composition of pre-tax national income in Germany since 1992, combining personal income tax returns, household survey data, and national accounts. Inequality rose from the 1990s to the late 2000s due to falling labor incomes among the bottom 50% and rising incomes in the top 10%. This trend reversed after 2007 as labor incomes across the bottom 90% increased. The top 1% income share, dominated by business income, remained relatively stable between 1992 and 2019. A large share of Germany’s top 1% earners are non-corporate business owners in laborintensive professions. At least half of the business owners in P99-99.9 and a quarter in the top 0.1% operate firms in professional services – a pattern mirroring the United States. From 1992 to 2019, Germany’s top 0.1% income concentration exceeded France’s and matched U.S. levels until the late 2000s.

Keywords: Income distribution, labor income, capital income, top incomes

JEL Classification: D31, E01, H2, H5, J3

Suggested Citation

Bach, Stefan and Bartels, Charlotte and Neef, Theresa, The Distribution of National Income in Germany, 1992-2019 (November 29, 2024). DIW Berlin Discussion Paper No. 2102, Available at SSRN: https://ssrn.com/abstract=5048647 or http://dx.doi.org/10.2139/ssrn.5048647

Stefan Bach

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Charlotte Bartels (Contact Author)

German Institute for Economic Research (DIW Berlin) - German Socio Economic Panel ( email )

DIW Berlin
Berlin, Berlin 10117
Germany

Theresa Neef

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

World Inequality Lab, Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014
France

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