The Distribution of National Income in Germany, 1992-2019
Stefan Bach, Charlotte Bartels, Theresa Neef
IWH Discussion Papers,
No. 25,
2024
Abstract
This paper analyzes the distribution and composition of pre-tax national income in Germany since 1992, combining personal income tax returns, household survey data, and national accounts. Inequality rose from the 1990s to the late 2000s due to falling labor incomes among the bottom 50% and rising incomes in the top 10%. This trend reversed after 2007 as labor incomes across the bottom 90% increased. The top 1% income share, dominated by business income, remained relatively stable between 1992 and 2019. A large share of Germany’s top 1% earners are non-corporate business owners in labor-intensive professions. At least half of the business owners in P99-99.9 and a quarter in the top 0.1% operate firms in professional services – a pattern mirroring the United States. From 1992 to 2019, Germany’s top 0.1% income concentration exceeded France’s and matched U.S. levels until the late 2000s.
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Worker Beliefs about Outside Options
Simon Jäger, Christopher Roth, Nina Roussille, Benjamin Schoefer
Quarterly Journal of Economics,
No. 3,
2024
Abstract
Standard labor market models assume that workers hold accurate beliefs about the external wage distribution, and hence their outside options with other employers. We test this assumption by comparing German workers’ beliefs about outside options with objective benchmarks. First, we find that workers wrongly anchor their beliefs about outside options on their current wage: workers that would experience a 10% wage change if switching to their outside option only expect a 1% change. Second, workers in low-paying firms underestimate wages elsewhere. Third, in response to information about the wages of similar workers, respondents correct their beliefs about their outside options and change their job search and wage negotiation intentions. Finally, we analyze the consequences of anchoring in a simple equilibrium model. In the model, anchored beliefs keep overly pessimistic workers stuck in low-wage jobs, which gives rise to monopsony power and labor market segmentation.
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23.05.2024 • 15/2024
Veranstaltungshinweis: „Europas Populisten im Aufwind: Ökonomische Ursachen und demokratische Herausforderungen“
Kurz vor der Europawahl diskutieren Wissenschaftlerinnen und Wissenschaftler am 3. Juni 2024 ab 18 Uhr an der Leopoldina in Halle (Saale) über den Aufschwung populistischer Parteien in Europa, dessen ökonomische Ursachen und die damit verbundenen demokratischen Herausforderungen.
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27.02.2024 • 5/2024
Presseeinladung zur Konferenz: „Eine CO2-neutrale Zukunft: Wie kann das funktionieren?“ am 6. März 2024 am IWH
Kriege, Wirtschaftsflaute und gesellschaftliche Polarisierung setzen die grüne Transformation unter Druck. Wie sie dennoch gelingen kann, diskutiert eine Konferenz am Leibniz-Institut für Wirtschaftsforschung Halle (IWH) mit Gästen aus Wissenschaft, Politik und Industrie. Es sprechen unter anderem Julia Schlenz, Präsidentin von Dow Deutschland, Österreich und Schweiz, sowie Sven Giegold, Staatssekretär im Bundeswirtschaftsministerium.
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Income Shocks, Political Support and Voting Behaviour
Richard Upward, Peter Wright
IWH Discussion Papers,
No. 1,
2024
Abstract
We provide new evidence on the effects of economic shocks on political support, voting behaviour and political opinions over the last 25 years. We exploit a sudden, large and long-lasting shock in the form of job loss and trace out its impact on individual political outcomes for up to 10 years after the event. The availability of detailed information on households before and after the job loss event allows us to reweight a comparison group to closely mimic the job losers in terms of their observable characteristics, pre-existing political support and voting behaviour. We find consistent, long-lasting but quantitatively small effects on support and votes for the incumbent party, and short-lived effects on political engagement. We find limited impact on the support for fringe or populist parties. In the context of Brexit, opposition to the EU was much higher amongst those who lost their jobs, but this was largely due to pre-existing differences which were not exacerbated by the job loss event itself.
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Media Response
Media Response December 2024 Steffen Müller: Eine Erhöhung des Mindestlohns wäre das falsche Signal in: Rhein-Neckar-Zeitung, 06.12.2024 IWH: Weitere Pleite in der Oberpfalz:…
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IWH Doctoral Programme in Economics The Halle Institute for Economic Research (IWH) offers doctoral positions in economics that lead to a PhD at a German university under the…
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IWH Bankruptcy Research The Bankruptcy Research Unit of the Halle Institute for Economic Research (IWH) presents the Institute’s research on the topics of corporate bankruptcy,…
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