IDEAS home Printed from https://ideas.repec.org/p/ajk/ajkpbs/001.html
   My bibliography  Save this paper

The Distribution of Wealth in Germany, 1895-2018

Author

Listed:
  • Thilo N. H. Albers

    (Humboldt University Berlin; Lund University)

  • Charlotte Bartels

    (DIWBerlin;UCFS; IZA.)

  • Moritz Schularick

    (University of Bonn, NYU and ECONtribute)

Abstract

This paper presents the first comprehensive study of the long-run evolution of wealth inequality in Germany. We combine tax data, surveys, national accounts and rich lists to study the distribution of wealth in Germany from 1895 to 2018. We show that the concentration of wealth in the hands of the top 1% has fallen by half,from close to 50% in 1895 to less than 25% today.The interwar period as well as World War II and its aftermath stand out as the great equalizers in 20th century German history.Since unification, two off-setting trends have shaped the German wealth distribution. Households at the top made substantial capital gains from rising equity valuations that were counterbalanced by large middle-class capital gains from rising house prices. Since 1993, wealth of the top 10% and of the middle class(50-90%) approximately doubled in real terms. However, these asset price induced gains in business and housing wealth almost entirely by-passed households in the bottom half of the wealt distribution who do not own these assets. Wealth of the bottom 50% of the population has stagnated since 1993 and their share in total wealth has nearly halved. The wealth gap between households in the bottom and the upper half has widened significantly. In 1993, households in the top 10% were about 50 times richer than households in the bottom half. Today, they are 100 times richer. Finally,we also show that official statistics underestimate privately held German business wealth and real estate wealth.

Suggested Citation

  • Thilo N. H. Albers & Charlotte Bartels & Moritz Schularick, 2020. "The Distribution of Wealth in Germany, 1895-2018," ECONtribute Policy Brief Series 001, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkpbs:001
    as

    Download full text from publisher

    File URL: https://www.econtribute.de/RePEc/ajk/ajkpbs/ECONtribute_PB_001_2020.pdf
    File Function: First version, 2020
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thomas Piketty & Li Yang & Gabriel Zucman, 2019. "Capital Accumulation, Private Property, and Rising Inequality in China, 1978–2015," American Economic Review, American Economic Association, vol. 109(7), pages 2469-2496, July.
    2. Alvaredo, Facundo & Atkinson, Anthony B. & Morelli, Salvatore, 2018. "Top wealth shares in the UK over more than a century," Journal of Public Economics, Elsevier, vol. 162(C), pages 26-47.
    3. Cinnirella, Francesco & Hornung, Erik, 2016. "Landownership concentration and the expansion of education," Journal of Development Economics, Elsevier, vol. 121(C), pages 135-152.
    4. Roine, Jesper & Waldenström, Daniel, 2014. "Long-Run Trends in the Distribution of Income and Wealth," Working Paper Series 1021, Research Institute of Industrial Economics.
    5. Dmitry Kuvshinov & Kaspar Zimmermann, 2018. "The Big Bang: Stock Market Capitalization in the Long Run," Working Papers 0136, European Historical Economics Society (EHES).
    6. Katharina Knoll & Moritz Schularick & Thomas Steger, 2017. "No Price Like Home: Global House Prices, 1870-2012," American Economic Review, American Economic Association, vol. 107(2), pages 331-353, February.
    7. Carsten Schröder & Charlotte Bartels & Markus M. Grabka & Martin Kroh & Rainer Siegers, 2018. "A Novel Sampling Strategy for Surveying High-Worth Individuals - An Application Using the Socio-Economic Panel," SOEPpapers on Multidisciplinary Panel Data Research 978, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 0. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    9. Richard Hauser, 2011. "Zwei deutsche Lastenausgleiche: eine kritische Würdigung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(4), pages 103-122.
    10. Thomas Blanchet & Juliette Fournier & Thomas Piketty, 2022. "Generalized Pareto Curves: Theory and Applications," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 263-288, March.
    11. Òscar Jordà & Moritz Schularick & Alan M. Taylor, 2017. "Macrofinancial History and the New Business Cycle Facts," NBER Macroeconomics Annual, University of Chicago Press, vol. 31(1), pages 213-263.
    12. Baten, Jorg & Wagner, Andrea, 2003. "Autarchy, market disintegration, and health: the mortality and nutritional crisis in Nazi Germany, 1933-1937," Economics & Human Biology, Elsevier, vol. 1(1), pages 1-28, January.
    13. Jacob Lundberg & Daniel Waldenström, 2018. "Wealth Inequality in Sweden: What can we Learn from Capitalized Income Tax Data?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 517-541, September.
    14. Braun, Sebastian & Omar Mahmoud, Toman, 2014. "The Employment Effects of Immigration: Evidence from the Mass Arrival of German Expellees in Postwar Germany," The Journal of Economic History, Cambridge University Press, vol. 74(1), pages 69-108, March.
    15. Filip Novokmet & Thomas Piketty & Gabriel Zucman, 2018. "From Soviets to oligarchs: inequality and property in Russia 1905-2016," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 189-223, June.
    16. Stefan Bach & Andreas Thiemann & Aline Zucco, 2019. "Looking for the missing rich: tracing the top tail of the wealth distribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(6), pages 1234-1258, December.
    17. Timm Bönke & Markus M. Grabka & Carsten Schröder & Edward N. Wolff & Lennard Zyska, 2019. "The Joint Distribution of Net Worth and Pension Wealth in Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(4), pages 834-871, December.
    18. Thomas Piketty & Gabriel Zucman, 2014. "Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1255-1310.
    19. Braun, Sebastian & Kvasnicka, Michael, 2014. "Immigration and structural change: Evidence from post-war Germany," Journal of International Economics, Elsevier, vol. 93(2), pages 253-269.
    20. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.
    21. 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.
    22. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
    23. Albers, Thilo Nils Hendrik, 2018. "The prelude and global impact of the Great Depression: Evidence from a new macroeconomic dataset," Explorations in Economic History, Elsevier, vol. 70(C), pages 150-163.
    24. Steven Brakman & Harry Garretsen & Marc Schramm, 2004. "The strategic bombing of German cities during World War II and its impact on city growth," Journal of Economic Geography, Oxford University Press, vol. 4(2), pages 201-218, April.
    25. Davis, Morris A. & Heathcote, Jonathan, 2007. "The price and quantity of residential land in the United States," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2595-2620, November.
    26. Òscar Jordà & Katharina Knoll & Dmitry Kuvshinov & Moritz Schularick & Alan M Taylor, 2019. "The Rate of Return on Everything, 1870–2015," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1225-1298.
    27. Jesper Roine & Daniel Waldenström, 2009. "Wealth Concentration over the Path of Development: Sweden, 1873–2006," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(1), pages 151-187, March.
    28. Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Gabriel Zucman, 2018. "Distributional National Accounts," Post-Print halshs-03342488, HAL.
    29. Stefan Bach & Marc Buggeln, 2020. "Geburtsstunde des modernen Steuerstaats in Deutschland 1919/1920 [Birth of the Modern Tax State in Germany 1919–1920]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(1), pages 42-48, January.
    30. Charlotte Bartels & Maria Metzing, 2019. "An integrated approach for a top-corrected income distribution," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 125-143, June.
    31. Nicola Fuchs-Schuendeln & Dirk Krueger & Mathias Sommer, 2010. "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 103-132, January.
    32. Eichenbaum, Martin & Parker, Jonathan A. (ed.), . "NBER Macroeconomics Annual 2017," National Bureau of Economic Research Books, University of Chicago Press, number 9780226577838, July.
    33. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2016. "Accounting for Wealth Inequality Dynamics: Methods, Estimates and Simulations for France (1800-2014)," Working Papers halshs-02794339, HAL.
    34. Crafts, Nicholas & Fearon, Peter (ed.), 2013. "The Great Depression of the 1930s: Lessons for Today," OUP Catalogue, Oxford University Press, number 9780199663187.
    35. Kuvshinov, Dmitry & Zimmermann, Kaspar, 2018. "The Big Bang: Stock Market Capitalization in the Long Run," MPRA Paper 88581, University Library of Munich, Germany.
    36. Thomas Piketty & Gilles Postel-Vinay & Jean-Laurent Rosenthal, 2006. "Wealth Concentration in a Developing Economy: Paris and France, 1807–1994," American Economic Review, American Economic Association, vol. 96(1), pages 236-256, March.
    37. Kuvshinov, Dmitry & Zimmermann, Kaspar, 2018. "The big bang: Stock market capitalization in the long run," IBF Paper Series 02-18, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    38. Rahlf, Thomas (Ed.), 2015. "Deutschland in Daten. Zeitreihen zur Historischen Statistik," EconStor Research Reports 124185, ZBW - Leibniz Information Centre for Economics.
    39. Philip Vermeulen, 2018. "How Fat is the Top Tail of the Wealth Distribution?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(2), pages 357-387, June.
    40. Giacomo Corneo, 2005. "The Rise and Likely Fall of the German Income Tax, 1958–2005," CESifo Economic Studies, CESifo Group, vol. 51(1), pages 159-186.
    41. Broadberry,Stephen & Harrison,Mark (ed.), 2005. "The Economics of World War I," Cambridge Books, Cambridge University Press, number 9780521852128.
    42. repec:bla:revinw:v:20:y:1974:i:2:p:143-80 is not listed on IDEAS
    43. Smith, James D & Franklin, Stephen D, 1974. "The Concentration of Personal Wealth, 1922-1969," American Economic Review, American Economic Association, vol. 64(2), pages 162-167, May.
    44. Bartels, Charlotte, 2019. "Top Incomes in Germany, 1871-2014," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 79(3), pages 669-707.
    45. Kocka, Jürgen, 1978. "Klassengesellschaft im Krieg: deutsche Sozialgeschichte 1914 - 1918. 2., durchges. u. erg. Auflage," EconStor Books, ZBW - Leibniz Information Centre for Economics, volume 8, number 122930, December.
    46. Joerg Baten & Rainer Schulz, 2005. "Making profits in wartime: corporate profits, inequality, and GDP in Germany during the First World War," Economic History Review, Economic History Society, vol. 58(1), pages 34-56, February.
    47. Stockhausen, Maximilian & Niehues, Judith, 2019. "Vermögensverteilung: Bemerkenswerte Stabilität," IW-Kurzberichte 81/2019, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    48. Ritschl, Albrecht, 2019. "Financial destruction: confiscatory taxation of Jewish property and income in Nazi Germany," LSE Research Online Documents on Economics 100727, London School of Economics and Political Science, LSE Library.
    49. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    50. James D. Smith, 1974. "The Concentration Of Personal Wealth In America, 1969," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 20(2), pages 143-180, June.
    51. Rick Ogden & Damian R. Thomas & Missaka Warusawitharana, 2016. "Corporate Equities by Issuer in the Financial Accounts of the United States," FEDS Notes 2016-03-29, Board of Governors of the Federal Reserve System (U.S.).
    52. Kopczuk, Wojciech & Saez, Emmanuel, 2004. "Top Wealth Shares in the United States, 1916-2000: Evidence From Estate Tax Returns," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 445-487, June.
    53. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Estimating Top Income and Wealth Shares: Sensitivity to Data and Methods," American Economic Review, American Economic Association, vol. 106(5), pages 641-645, May.
    54. Eichenbaum, Martin & Parker, Jonathan A. (ed.), . "NBER Macroeconomics Annual 2016," National Bureau of Economic Research Books, University of Chicago Press, number 9780226490229, April.
    55. Christian Westermeier & Markus M. Grabka, 2015. "Significant Statistical Uncertainty over Share of High Net Worth Households," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 5(14/15), pages 210-219.
    56. Thomas Piketty, 2003. "Income Inequality in France, 1901-1998," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 1004-1042, October.
    57. Ritschl, Albrecht, 2019. "Financial destruction: confiscatory taxation of Jewish property and income in Nazi Germany," Economic History Working Papers 100727, London School of Economics and Political Science, Department of Economic History.
    58. repec:hal:pseose:halshs-01109372 is not listed on IDEAS
    59. Markus M. Grabka & Joachim R. Frick, 2007. "Vermögen in Deutschland wesentlich ungleicher verteilt als Einkommen," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 74(45), pages 665-672.
    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. Joern H. Block & Christian Fisch & Mirko Hirschmann, 2022. "The determinants of bootstrap financing in crises: evidence from entrepreneurial ventures in the COVID-19 pandemic," Small Business Economics, Springer, vol. 58(2), pages 867-885, February.
    2. Paolo Acciari & Facundo Alvaredo & Salvatore Morelli, 2024. "The Concentration of Personal Wealth in Italy 1995–2016," Journal of the European Economic Association, European Economic Association, vol. 22(3), pages 1228-1274.
    3. Charlotte Bartels & Carsten Schröder, 2020. "Die Bedeutung von Mieteinkommen und Immobilien für die Ungleichheit in Deutschland," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(10), pages 741-746, October.
    4. Keßler, Daniela & Zerres, Thomas, 2020. "Rechtsrahmen der Geldwäschebekämpfung," Working Papers for Marketing & Management 48, Offenburg University, Department of Media and Information.
    5. Charlotte Bartels & Carsten Schroeder, 2020. "The role of rental income, real estate and rents for inequality in Germany," Working Papers 7, Forum New Economy.
    6. Charlotte Bartels & Carsten Schroeder, 2020. "Income, consumption and wealth inequality in Germany: Three concepts, three stories?," Basic Papers 2, Forum New Economy.
    7. Wyrwich, Michael & Steinberg, Philip J. & Noseleit, Florian & de Faria, Pedro, 2022. "Is open innovation imprinted on new ventures? The cooperation-inhibiting legacy of authoritarian regimes," Research Policy, Elsevier, vol. 51(1).
    8. Schaff, Felix S.F., 2023. "Warfare and Economic Inequality: Evidence from Preindustrial Germany (c. 1400-1800)," Explorations in Economic History, Elsevier, vol. 89(C).
    9. Schulhof, Vera & van Vuuren, Detlef & Kirchherr, Julian, 2022. "The Belt and Road Initiative (BRI): What Will it Look Like in the Future?," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    10. Waldenström, Daniel, 2021. "Wealth and History: An Update," Working Paper Series 1411, Research Institute of Industrial Economics.
    11. Rubio-Domingo, G. & Linares, P., 2021. "The future investment costs of offshore wind: An estimation based on auction results," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).
    12. Daniel Waldenström, 2021. "Wealth and History: An Update," CESifo Working Paper Series 9366, CESifo.

    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. Albers, Thilo & Bartels, Charlotte & Schularick, Moritz, 2022. "Wealth and its Distribution in Germany, 1895-2018," CEPR Discussion Papers 17269, C.E.P.R. Discussion Papers.
    2. Gabriel Zucman, 2019. "Global Wealth Inequality," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 109-138, August.
    3. Òscar Jordà & Katharina Knoll & Dmitry Kuvshinov & Moritz Schularick & Alan M Taylor, 2019. "The Rate of Return on Everything, 1870–2015," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1225-1298.
    4. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    5. Aroop Chatterjee & Léo Czajka & Amory Gethin, 2020. "Estimating the Distribution of Household Wealth in South Africa," Working Papers hal-02876974, HAL.
    6. Filip Novokmet & Thomas Piketty & Gabriel Zucman, 2018. "From Soviets to oligarchs: inequality and property in Russia 1905-2016," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 189-223, June.
    7. 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.
    8. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Post-Print halshs-03231244, HAL.
    9. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," PSE-Ecole d'économie de Paris (Postprint) halshs-03231244, HAL.
    10. Daniel Waldenström, 2021. "Wealth and History: An Update," CESifo Working Paper Series 9366, CESifo.
    11. Waldenström, Daniel, 2021. "Wealth and History: An Update," Working Paper Series 1411, Research Institute of Industrial Economics.
    12. Thomas Blanchet & Bertrand Garbinti & Jonathan Goupille-Lebret & Clara Martínez-Toledano, 2018. "Applying Generalized Pareto Curves to Inequality Analysis," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 114-118, May.
    13. Carranza, Rafael & De Rosa, Mauricio & Flores, Ignacio, 2023. "Wealth Inequality in Latin America," IDB Publications (Working Papers) 12906, Inter-American Development Bank.
    14. Clara Martínez Toledano, 2017. "House Price Cycles, Wealth Inequality and Portfolio Reshuffling," Working Papers halshs-02797549, HAL.
    15. Mauricio De Rosa, 2022. "Accumulation, inheritance and wealth distribution: first estimates of the untold half," Documentos de Trabajo (working papers) 22-07, Instituto de Economía - IECON.
    16. Michele Cantarella & Andrea Neri & Maria Giovanna Ranalli, 2021. "Mind the wealth gap: a new allocation method to match micro and macro statistics for household wealth," Papers 2101.01085, arXiv.org, revised Jan 2021.
    17. Arun Advani & George Bangham & Jack Leslie, 2021. "The UK's wealth distribution and characteristics of high‐wealth households," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 397-430, September.
    18. Clara Martínez Toledano, 2017. "House Price Cycles, Wealth Inequality and Portfolio Reshuffling," PSE Working Papers halshs-02797549, HAL.
    19. Bartels, Charlotte & Waldenström, Daniel, 2021. "Inequality and top incomes," GLO Discussion Paper Series 959, Global Labor Organization (GLO).
    20. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2017. "Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts," Working Papers 201704, World Inequality Lab.

    More about this item

    Keywords

    Wealth inequality; wealth distribution; wealth tax.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy

    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:ajk:ajkpbs:001. See general information about how to correct material in RePEc.

    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: ECONtribute Office (email available below). General contact details of provider: https://www.econtribute.de .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.