Income Polarisation in Germany Is Rising

Abstract

Income disparities between poorer and richer households in Germany have been widening since reunification. Although this income polarisation is reduced during economically favourable periods by strong growth in employment, once the good times are over, it rises all the faster. The longer-term trend not only shows that the number of poorer households is steadily increasing, but also that on average they are getting poorer. On the flip side, the trend is toward an increasing number of richer individuals, whose average wealth is steadily increasing. This contrast is not only felt to be highly unfair, but also creates uncertainty among the middle class. Although the year of the financial crisis, 2009, saw the number of high-income households decrease, the average incomes of the remaining rich households continued to rise. As a result of job market measures, the lower income bracket has scarcely been affected by the financial and economic crisis