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Income Distribution in Germany: Real Income on the Rise since 1991 but More People with Low Incomes

Author

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  • Markus M. Grabka
  • Jan Goebel

Abstract

Between 1991 and 2015, the real disposable, needs-adjusted income of persons in private households in Germany rose by 15 percent on average. The majority of the population has benefited from the growth in real income, but the groups at the lower end of the income distribution have not. Inequality in both market and disposable needs-adjusted household income has remained high. These are the findings of the present study based on data from the Socio-Economic Panel (SOEP) study. The risk-of-poverty rate was 16.8 percent in 2015, in comparison to around 11 percent in the mid-1990s. The risk-of-poverty rate among the population without a migration background was 13 percent. At 29 percent, it was more than twice as high for persons with a direct migration background - those who were born in a foreign country and then migrated to Germany. The increase in the risk-of-poverty rate is mainly the result of the higher proportion of migrants. Differentiating by housing status yields a constant low risk-of-poverty rate for homeowner households, while tenant households must confront a significant increase in the risk of poverty.

Suggested Citation

  • Markus M. Grabka & Jan Goebel, 2018. "Income Distribution in Germany: Real Income on the Rise since 1991 but More People with Low Incomes," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 8(21), pages 181-190.
    • Handle: RePEc:diw:diwdwr:dwr8-21-1
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.584755.de/dwr-18-21-1.pdf
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    Citations

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    Cited by:

    1. Charlotte Bartels & Carsten Schroeder, 2020. "Income, consumption and wealth inequality in Germany: Three concepts, three stories?," Basic Papers 2, Forum New Economy.
    2. Valentina S. Consiglio & Denisa M. Sologon, 2022. "The Myth of Equal Opportunity in Germany? Wage Inequality and the Role of (Non-)academic Family Background for Differences in Capital Endowments and Returns on the Labour Market," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(2), pages 455-493, January.
    3. Johannes Thema & Florin Vondung, 2020. "Expenditure-Based Indicators of Energy Poverty—An Analysis of Income and Expenditure Elasticities," Energies, MDPI, vol. 14(1), pages 1-18, December.

    More about this item

    Keywords

    Income inequality; poverty; SOEP;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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