On average in 2002 the net wealth  in Germany was at 6.6 trillion Euros, thus 88 000 Euro per adult, an increase by 10 % since 2002. However, when arranging all persons according to their net assets a picture of great wealth inequalities can be displayed : 27 % of the German population over 17 years had no financial assets or was indebted in 2007. In contrast, in the same year the wealthiest 10 % of the population held 61.1 % of net assets, of which 46 % were held by the upper 5 % and around 23 % by the upper 1%.
Between 2002 and 2007 only those among the wealthiest 10 % managed to increase their share of wealth. The situation of the least wealthy 10 % is especially precarious, as their "wealth" consists of debts, which have also increased during the same period of time.
Another indicator describing wealth inequality is the so called 90-50-decile ratio. It indicates how many assets the poorest person of the wealthiest 10 % holds in comparison to the richest in the middle of the population. In 2002, the poorest of the wealthiest 10 % had around 14 times more assets than the person in the middle of the wealth distribution scale. Until 2007 this proportion has increased to 14.5.
Comparing the same values as in the table above between East and West Germany, pronounced differences in net wealth can be observed. With an average of 101,208 Euros the net assets of adults in the old federal states were more than three times higher in 2007 than the average for East Germany, figuring at 30,723 Euros.
This difference became more pronounced during the 5 year survey period : in the old states, net wealth increased by more than 11 percent, whilst in the new states this figure fell by almost 10 percent. Especially the wealthiest 1 % of the East German population have been affected, as their average wealth has decreased by more than 14 % between 2002 and 2007 while the average wealth of their West German counterparts increased by more than 13 %.
One could expect that the decrease in wealth of the wealthiest in East Germany would contribute to a more equal distribution of wealth. However this is not the case, as can be seen in the value of the Gini-coefficient. This value was higher in the East than in the West in both years observed and has risen at a comparable rate in both parts of the country (+2.7 and +2.6). In conclusion, neither the rise in wealth of the wealthiest in West Germany nor the decrease of it in the East had an impact on the distribution of wealth.
According to the researchers, the main reason for the wealth drop is a decline in the market value of owner-occupied property, especially observed in East Germany. Consequently, property is declining as a contributor to wealth, while monetary wealth and assets from private insurances, both of which are naturally more represented among the population with high incomes, are becoming more important.
This development could notably affect older people : With the rising gaps in employment biographies among East Germans and a lower average income in this region – both resulting in lower pension benefits – the low share of wealth in this region could lead to a rise of old-age poverty in the future especially in East Germany.
|Please click here to read the full research paper "Wealth inequality on the rise in Germany" by Markus Grabka and Joachim Frick.|