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Wealth Accumulation in Germany: Current Trends and Drivers

Current Project

Project Management

Dr. Charlotte Bartels
Prof. Dr. Carsten Schröder

Project Period

November 1, 2022 - December 31, 2023

Funded by

Federal Ministry of Labour and Social Affairs (BMAS)

The dynamic recent development of asset prices, especially of real estate since 2010, and the widening wealth gap have sparked renewed public debate on the topic of wealth accumulation. Yet the existing literature leaves important questions about wealth accumulation unanswered: How great is the disparity in capital gains between rural and urban real estate owners? What are the drivers of wealth accumulation in Germany besides capital gains from real estate ownership? How much more do people have to work to buy property today than they did in 1990 or 2000?

The project will show which factors are important for wealth accumulation and how policy measures to promote wealth accumulation should be designed.

The project is comprised of four parts:

In the first part, modern machine learning methods will be used to identify, in a data-driven manner, which of the possible determinants are most influential and how they interact.

In the second part, the distributional effects of increased real estate and stock prices on different population groups and regions (urban vs. rural) will be analyzed.

The third part will examine factors that played a role in the accumulation (or loss) of individual wealth (wealth mobility) in Germany between 2002 and 2019. Wealth mobility results, on the one hand, from income mobility, but on the other, it depends on individual savings and investment decisions and especially on portfolio returns.

In the fourth part, real estate price trends will be compared with labor market trends for the first time. To this end, we will study how many hours do employed people today have to work compared to people in the same segment of the wage distribution 20 or 30 years ago to acquire a property of equivalent value; and regional differences, especially between rural and urban areas but also compared to the most prosperous metropolitan regions (“prime locations”).

DIW Team