Development and Background of Income Distribution in Germany

The Economist Simon Kuznets Smith, Nobel Laureate in Economics in 1971, examined the empirical relationship between economic growth and inequality in income distribution of an economy. He stated that inequality increases initially during the development of a country and then decreases. The Kuznets curve is a graphical representation of this relationship. Since the 1990s and 2000s, however, the inequality in OECD countries has begun to rise again. This is indeed the case in Germany. The study shows that the reason for this development cannot be traced to any one single factor, for example globalization, but is rather the result of structural factors and tends to occur in the transition from an industrial society to a highly developed services economy. The study will investigate which factors - such as globalization, advances in technology, politics and institutions, the education level and changes in household structures - are responsible for the rise in income inequality in Germany and how strongly each factor influences this rise.