Income inequality and top incomes: some recent empirical developments with a focus on Germany

Abstract

During the few last years, several studies have revealed that income differences have increased in a number of OECD countries. While most of the corresponding empirical analyses have focused on general trends and poverty in the past, this paper emphasizes the highest income groups. A strong increase in top income shares has recently been well documented for several English-speaking countries, especially for the United States. The present paper is mainly concerned with the developments in Germany in the past years. Using a mixture of different data, the evolution of gross and net income differences is analysed and compared with the developments in other countries. It is shown that top incomes and top income shares in Germany have increased in the recent past. Finally, some possible explanations for these developments are discussed.

Varieties of capitalism, increasing income inequality and the sustainability of long-run growth

“…We calculate and report values of both 3.1 Degrees of neoliberalism across varieties of capitalism (Anselmann and Krämer, 2015), but in general Germany is less unequal than the US. This is reflected in the values of key parameters…”

“…It is well known that the epicenters of the 2007-2009 financial crisis and Great Recession were the US and UK, two "liberal market economies" (Hall and Soskice, 2001) where, by 2007, neoliberalism was most advanced and where increases in income inequality have been most pronounced over the last thirty-five years. Even as "coordinated market economies" (Hall and Soskice, 2001) such as Germany have become increasingly neoliberal over the past 35 years (on which see Anselmann and Krämer (2015) ), have there been limits to increases in inequality in these economies? And if so, would the neoliberal growth process in a liberal market economy such as the US have been made more robust by exposure to the more tempered increases in inequality experienced in coordinated market economies during the neoliberal era?…”