Factor shares, personal income distribution and top incomes in Germany

Kai Schmid, Andreas Peichl and Moritz Drechsel-Grau

No 108e-2015, IMK Report from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: Recent studies on income distribution in Germany reveal that the under-reporting of top incomes in survey data leads to substantial misjudgement in the development of inequality. The use of administrative tax data allows for a realistic consideration of top incomes and offers a more comprehensive coverage of capital income when measuring inequality. Moreover, these data more closely link inequality changes to macroeconomic developments in Germany. Taking this into amount, the alleged trend reversal in German inequality around 2005 appears to be a data-specific phenomenon which rests on the specific characteristics of survey data that primarily cover the lower tail of the income distribution. Moreover, such comprehensive evaluations suggest that inequality has more recently been increasing. A more valid assessment of inequality trends in Germany requires an improvement of the access to and the coupling of administrative micro data such as the German Taxpayer-Panel and the German Mikrozensus or data from the Federal Employment Agency.

Pages: 10 pages
Date: 2015
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:imk:report:108e-2015

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