The poor are getting poorer and the rich are getting richer: With this thesis, the SPD, the Greens, the Left and the trade unions justified calls for a higher minimum wage and higher social benefits for the unemployed, coupled with higher taxation of high incomes and assets, even during the election campaign.

But to what extent does the thesis apply to Germany at all?

Dietrich Creutzburg

Business correspondent in Berlin.

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The Institute of German Economy (IW) in Cologne has now checked this on the basis of a number of indicators for the past decades and draws a clear conclusion: The "linguistic image that is often sought of an increasingly widening income gap between rich and poor" turns out to be " not very conclusive ”. In short: The share of wages in national income has risen significantly recently. At the same time, high earners pay a higher proportion of income taxes than in 1998. And the proportion of citizens with incomes below the statistical poverty risk threshold is falling.

After the turn of the millennium, the wage share actually fell from a good 70 percent to around 65 percent, as IW researcher Maximilian Stockhausen shows on the basis of official data.

This quota indicates what proportion of the total national income flows to employee households via wages for dependent work.

However, under the influence of falling unemployment in the past decade, the trend reversed: The wage share leveled off at 69 percent until the weakness of industry and the Corona crisis led to a further surge.

As a result of falling capital income, the wage share rose to 74 percent in 2020.

Higher incomes pay more taxes

In contrast, the shares of the different income groups in the income tax revenue have not shifted as much. Statistically, nothing is left of the controversial relief for higher incomes by the red-green coalition: The upper tenth of households most recently paid 51 percent of total income taxes, almost one percentage point more than in 1998. The proportion of the lower half was almost unchanged at 7.3 Percent.

The study also analyzes how income inequality has developed.

The overall picture is less clear here - which is mainly due to the migration factor: The proportion of households with less than 60 percent of the median income has fluctuated between 14 and 17 percent since around 2005, with an upward trend particularly around 2015. According to Stockhausen, this can be explained by the fact that many initially destitute refugees came to the country and have since been included in the statistics.

Otherwise the proportion of poorer households would have fallen.

The researcher considers it encouraging that this has recently stabilized again.

Overall, a "phase of inclusive growth" can be identified since then - which includes not only integration but also coping with the consequences of the pandemic.

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