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Has the gap between rich and poor widened? Study shows clear result

2021-09-26T17:41:42.407Z


The discussion about income distribution has recently flared up again. Right? The Institute of the German Economy (IW) comes to a clear conclusion in a study. A guest contribution by IW President Prof. Michael Hüther.


The discussion about income distribution has recently flared up again.

Right?

The Institute of the German Economy (IW) comes to a clear conclusion in a study.

A guest contribution by IW President Prof. Michael Hüther.

When it comes to rich and poor, there is hardly a picture that is used more often than that of the income gap. It is often said that it is opening up more and more - especially often during election campaign times. What is meant is: the rich get richer, the poor get poorer. However, if you take a closer look at the distribution of income and wealth, you will quickly discover that inequality has not increased in recent years. In terms of income in particular, the relative distribution has been remarkably stable since 2005.

This is mainly due to two opposing developments: On the one hand, Germany has had a long history of success in the labor market over the past 15 years, which has significantly reduced inequality, especially between 2005 and 2016.

However, this was countered by immigration from 2010 onwards. As a result, the Gini coefficient, which is used to measure inequality, remained almost constant over this period.

Labor income most important source of income

For most German households, regular earned income is the most important source of income.

There has been a clear plus here in the past few decades: Between 1991 and 2018, nominal wages rose by an average of 76 percent.

Even taking into account the price increases, there remains a real plus of twelve percent.

Most recently, the people in Germany who receive low wages, for example because they work in restaurants or part-time, have benefited from this.

The need-weighted real household net income of the bottom ten percent has risen by around seven percent since 2015 (1st decile), in the middle (5th decile) by around seven percent and in the top ten percent by around five percent.

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It remains to be seen what role Corona will play in this development.

There is still a lack of data for a well-founded analysis.

The inequalities in earned income and market income are likely to have increased, but this increase has been effectively cushioned by the welfare state measures.

Income distribution: integrative performance of the social market economy

Anyone who calls for a much stronger redistribution and claims that the broad masses have been left out in terms of increasing prosperity is mistaken and misunderstood the integrative performance of the social market economy and its institutions.

The main task for the next federal government is likely to be not to be carried away by ideologically motivated snap-shots and rather to create the conditions for a new chapter in the German economic success story.

Source: merkur

All news articles on 2021-09-26

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