Social inequality: Scope, development, consequences

Is social inequality on the increase in Germany? Is inequality restricting or stimulating the growth of the economy? How should we deal with inequality in the future? Graphs and brief analyses answer nine key questions.

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1. Is inequality of income growing?

Differences in income are now much greater than twenty years ago. It was primarily at the beginning of the 2000s that inequality in the household incomes in Germany increased.
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2. How is wealth distributed in Germany?

Private wealth in Germany is very unequally distributed. What is known as the Gini coefficient for wealth was 0.76 in 2014. Altogether the wealthiest ten per cent of households together own about 60 per cent of the total wealth.
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Graphic wealth inequality

3. Is Germany an unequal country?

In terms of income distribution, Germany comes off somewhat better in a European comparison. Compared to countries with a similar level of prosperity, Germany is a rather unequal country. more ...

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4. Does inequality damage growth?

The upshot of recent research work is that in recent decades countries with greater income inequality have evinced less economic growth and shorter growth phases than countries with less income inequality. more ...

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5. What factors determine the perception of inequality in Germany?

A recent study by Niehues (2016) concludes that perceived inequality correlates only negligibly with actual income inequality. According to the UN and OECD, besides income there are other significant factors of inequality such as education, assets and health. more ...

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6. Inequality: How can the database be improved?

The Gini coefficient of need weighted household incomes is generally used as a measure of income inequality. The empirical basis for this in Germany is the Socioeconomic Panel (SOEP) data. The problem is that in surveys the top-earners tend to be under-represented. The result is that the extent of inequality at the upper end of the distribution is underestimated – and with it income inequality as a whole. more ...

7. How widespread is poverty in Germany?

By the standard definition used in science, a person is deemed poor if he/she is living in a household whose disposable income is less than 60 per cent of the median need weighted net household income. In Germany one in six is living in relative poverty. more ...

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8. How will inequality develop in the next few years? What role do large-scale immigration and the minimum wage play?

Since the financial and economic crisis the significance of wealth incomes has risen. Inequality could increase in the short term through the large-scale migration of refugees. Besides migration, the minimum wage will also affect the further development of income inequality. more ...

9. What could be done to reduce inequality?

Politicians and social partners could do something effective on many different levels, for example: Education, level of trade union organisation, minimum wage, progressive taxation... more ...

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