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Factor shares, personal income distribution and top incomes in Germany

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  • Kai Daniel Schmid
  • Andreas Peichl
  • Moritz Drechsel-Grau

Abstract

Recent studies on income distribution in Germany reveal that the under-reporting of top incomes in survey data leads to substantial misjudgement in the development of inequality. The use of administrative tax data allows for a realistic consideration of top incomes and offers a more comprehensive coverage of capital income when measuring inequality. Moreover, these data more closely link inequality changes to macroeconomic developments in Germany. Taking this into amount, the alleged trend reversal in German inequality around 2005 appears to be a data-specific phenomenon which rests on the specific characteristics of survey data that primarily cover the lower tail of the income distribution. Moreover, such comprehensive evaluations suggest that inequality has more recently been increasing. A more valid assessment of inequality trends in Germany requires an improvement of the access to and the coupling of administrative micro data such as the German Taxpayer-Panel and the German Mikrozensus or data from the Federal Employment Agency.

Suggested Citation

  • Kai Daniel Schmid & Andreas Peichl & Moritz Drechsel-Grau, 2015. "Factor shares, personal income distribution and top incomes in Germany," IMK Report 108e-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    • Handle: RePEc:imk:report:108e-2015
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    1. Späth Jochen & Schmid Kai Daniel, 2018. "The Distribution of Household Savings in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 238(1), pages 3-32, February.

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