How unequal Germany really is

For some, the findings are clear: in Germany, incomes and wealth are drifting dangerously apart between rich and poor – similar to what seems to be the case in the USA, Great Britain and many other countries. Others argue that income inequalities in Germany are strongly compensated by transfers and that the gap has not widened since 2005.

Who is right? And how is it possible that such spectacularly different findings are circulating about one and the same phenomenon for one and the same country? We have taken the dispute as an opportunity to launch a major research project that will determine, in three stages, what is really known – and what is not – on an empirically sound basis and with international expert review. And how the situation in the country should actually be assessed to the best of our knowledge and belief.

The project is coordinated and led by inequality researchers at the German Institute for Economic Research (DIW). Experts from Germany are involved, as are Branko Milanovic and representatives of the World Inequality Lab (WIL) led by Thomas Piketty in Paris.

In a first baseline study, which we presented at our launch in 2019 and which is now available, the researchers have compiled an overview of the empirical evidence on income and wealth that is currently available for Germany. According to the study, there is every indication that income inequality has not increased further in recent years – but it had also risen sharply previously. In terms of wealth, on the other hand, the gap has widened quite clearly – in all probability, the gap between rich and poor is at a record level here. More details – see here. The study also involved determining once again which indicators are actually suitable or less suitable for measuring inequality.

The second phase of the project is currently underway. The aim is to identify the key causes of inequality in Germany – which is important in order to find out which instruments are suitable for reversing the trend. This is precisely what the third phase will be about: testing the usefulness and efficiency of individual possible measures against inequality.

The first results from the second phase are currently being discussed internally. If you are interested, please contact us at info@newforum.org. More on this shortly here.