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Judith Niehues IW-Trends No. 5 26. October 2017 Income Development, Inequality and Poverty: The Results of Different Data Sets

The issue of inequality has been receiving more and more attention in public and media debates. This was especially the case in the run up to the 2017 Bundestag elections, when academic studies and reports in the media drew a gloomy picture of how incomes and inequality were developing in Germany

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The Results of Different Data Sets
Judith Niehues IW-Trends No. 5 26. October 2017

Income Development, Inequality and Poverty: The Results of Different Data Sets

IW-Trends

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German Economic Institute (IW) German Economic Institute (IW)

The issue of inequality has been receiving more and more attention in public and media debates. This was especially the case in the run up to the 2017 Bundestag elections, when academic studies and reports in the media drew a gloomy picture of how incomes and inequality were developing in Germany

However, the much cited and particularly alarming finding that since reunification the poorest two quintiles of the population had registered hardly any real income growth does not stand up to scrutiny. With a slight shift in the start of the monitoring period and adjustment for changes in the sampling method, what was presented as a real rise of only 1 per cent turns into growth of nearly 8 per cent over the last 20 years. Most importantly, in relative terms the lower income groups have shared the positive economic development of the past decade equally with the middle and upper income groups. This is also reflected in the stable income distribution since 2005. Unlike inequality, the risk of poverty has been on the rise again since about 2010. However, this issue needs to be evaluated separately as it is linked, among other things, with the influx of refugees over the past few years. In general, the debate on inequality and poverty is being increasingly marred by the uncritical representation of discontinuities in the time series as real changes. The present paper promotes a more critical approach to the underlying data sets and advocates the use of plausibility tests.

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The Results of Different Data Sets
Judith Niehues IW-Trends No. 5 26. October 2017

Judith Niehues: Einkommensentwicklung, Ungleichheit und Armut

IW-Trends

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German Economic Institute (IW) German Economic Institute (IW)

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Michael Hüther / Judith Niehues External Publication 8. June 2022

Perception and Reality: Inequality and Unemployment in Germany

Data for the time before the corona pandemic reveal a largely positive picture of the economic and social development in Germany. Most individuals perceived their own situation as very positive, but their views on society are rather pessimistic and overly ...

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Judith Niehues / Maximilian Stockhausen IW-Trends No. 2 16. May 2022

A Focus on the Middle Class - Demarcation, Development and Mobility

In 2018, roughly every second German was a member of the middle class as measured by income, a proportion which has barely changed for more than a decade. However, the lower income threshold of this middle-income group has risen - an indication of increased ...

IW

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