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

30 Pages Posted: 26 Apr 2007

See all articles by Stefan Bach

Stefan Bach

German Institute for Economic Research (DIW Berlin)

Giacomo Corneo

Free University of Berlin (FUB); Universität Osnabrück - Faculty of Business Administration - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Viktor Steiner

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2007

Abstract

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.

Keywords: income distribution, top incomes, inequality

JEL Classification: D31, D33, H24

Suggested Citation

Bach, Stefan and Corneo, Giacomo and Steiner, Viktor, From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992-2001 (April 2007). IZA Discussion Paper No. 2723, Available at SSRN: https://ssrn.com/abstract=982113

Stefan Bach

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

Mohrenstraße 58
Berlin, 10117
Germany

Giacomo Corneo

Free University of Berlin (FUB) ( email )

Van't-Hoff-Str. 8
D-10785 Berlin, Berlin 14195
Germany

Universität Osnabrück - Faculty of Business Administration - Department of Economics ( email )

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Germany
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+49 541 969 2722 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Viktor Steiner (Contact Author)

Zentrum Fuer Europaeische Wirtschaftsforschung (ZEW) - Center for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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