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DIW study: Corona crisis reduces income inequality

2021-05-05T02:39:05.441Z

Corona hits the poor harder than the rich. Nevertheless, a current DIW study shows: During the pandemic, the gap between high and low incomes in Germany has narrowed somewhat.



Enlarge image

Pedestrian zone in Munich (March): the gap between high and low incomes has narrowed somewhat

Photo: Frank Hoermann / SVEN SIMON / picture alliance

The pandemic is seen as an intensifier of social imbalances - recently, for example, the fact that people in economically weak parts of the city are exposed to a significantly higher risk of infection has attracted broader attention.

But statistically at least one inequality has become a little smaller: In the corona crisis of all things, the gap between people with lower incomes and high earners in Germany has narrowed somewhat.

This is shown by a study by the German Institute for Economic Research (DIW).

According to the study, the self-employed, who mostly belong to the upper half of the income groups, recorded losses due to the measures taken to contain the pandemic.

"The financial crisis already showed that income inequality is reduced in times of crisis because upper incomes fall more than those in lower income groups," explained study author and DIW expert Markus Grabka.

"In the corona pandemic, the falling incomes of the self-employed have a particular impact on distribution."

However, the falling inequality is only a snapshot.

"If the pandemic continues well into the year and the containment measures tighten again, this could go hand in hand with rising insolvency figures and increasing unemployment and also affect the income situation across the board," warned Grabka.

According to the study

reduced

the

monthly net household income of self-employed

in the second lockdown

by an average of 16 per cent or 460 euros

compared to the year 2019. Sales and profits are partly fallen considerably in some sectors, especially in services because of the measures to combat the pandemic.

In

contrast, the

incomes

of

salaried and civil servants' households rose

nominally by

five percent

.

In the

other household

types, they

remained unchanged

on average

.

Data from a special survey by the Socio-Economic Panel from January and February of the current year were evaluated.

A study by the Institute of the German Economy (IW) last December suggested that Corona did not statistically increase inequality in income - but it only evaluated data up to August 2020, i.e. the effects of the first shutdown. The IW researchers also attributed this to government measures that partially compensated for the sometimes high income losses.

In view of the current study, DIW researcher Grabka is calling for the most targeted financial support possible for self-employed and medium-sized companies in order to prevent bankruptcies and business closings: "The federal government should think about granting the self-employed affected by the pandemic partial coverage of the cost of living." So far, fixed operating costs have mainly been covered. In addition, politicians should check whether it is necessary to continue to help companies with significant profits and dividend payments by means of short-time working benefits at the expense of the public sector, said Grabka.

According to the DIW, income inequality has basically stagnated for around 15 years.

Although wage inequality has decreased since the introduction of the minimum wage in 2015, this is not reflected in household incomes, which include, for example, investment income.

According to the latest data from the Bundesbank, the stock market boom, among other things, drove the total financial wealth of people in Germany to a record high at the end of 2020.

fdi / dpa

Source: spiegel

All business articles on 2021-05-05

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