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Lifetime Earnings of Workers in Germany: Inequality Doubles Between 1935 and 1972 Birth Cohorts

Press Release of December 3, 2014

Income inequality is usually considered in terms of its current development. A long-term perspective allows us to compare the income situation of today’s generation with that of their parents. For the first time ever, we have measured the inequality of wages and salaries earned over an entire working lifetime using a new kind of dataset. The findings show that the inequality of lifetime social security earnings of western German male workers doubled between the 1935 and 1972 birth cohorts. 20 to 40 percent of this increase can be attributed to a higher level of unemployment among those at the lower end of the wage scale. The remainder is caused by a wider distribution of earnings. The greater inequality of lifetime earnings could have far-reaching consequences. Thus, it is expected that the opportunities to save up significant assets through their own efforts are increasingly limited for the recipients of lower and medium lifetime earnings for the birth cohorts analyzed here.