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Income Inequality Remains High in Germany: Young Singles and Career Entrants Increasingly at Risk of Poverty

DIW Weekly Report 25 / 2015, S. 325-339

Jan Goebel, Markus M. Grabka, Carsten Schröder

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According to calculations based on the Socio-Economic Panel (SOEP) study, average disposable household income rose by five percent in real terms between 2000 and 2012. Only the highest earners have benefited from this development. While real income in the top ten percent rose by more than 15 percent, the earnings of the middle income groups stagnated, and even fell in the lower income groups. As a result, the inequality of disposable household income in Germany climbed sharply up until 2005 and has remained at the same high level ever since. At the same time, the risk of poverty in Germany increased significantly between 2000 and 2009, and is currently at approximately 14 percent. The risk of poverty has risen significantly for young singles (up to the age of 35) in particular. Their at-risk-of-poverty rate increased by 12 percentage points since 2000 to just under 40 percent in 2012. Even being in gainful employment does not necessarily protect them from poverty: in particular, young adults (aged 25 to 35) who are just starting out in their careers are increasingly at risk of poverty.

Carsten Schröder

Board of Directors SOEP and Division Head Applied Panel Analysis in the German Socio-Economic Panel study Department

Markus M. Grabka

Board of Directors SOEP & Acting Division Head Knowledge Transfer in the German Socio-Economic Panel study Department

JEL-Classification: D31;I31;I32
Keywords: Income inequality, poverty, SOEP
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