Wealth and its Distribution in Germany, 1895-2018

In this paper, Thilo N. H. Albers, Charlotte Bartels and Moritz Schularick present the first comprehensive study of wealth and its distribution in Germany since the 19th century. They combine tax and archival data, household surveys, historical national accounts, and rich lists to analyze the evolution of the German wealth distribution over the long run. They show that the top 1% wealth share has fallen by half, from close to 50% in 1895 to 27% today. The interwar period and the wealth taxation in the aftermath of World War II stand out as the great equalizers in 20^th century German history. After unification in 1990, households at the top made substantial capital gains from rising business wealth while the middle-class had large capital gains in the housing market, while wealth share of the bottom 50% halved. The findings speak to the importance of historical shocks to the distribution and valuations of existing wealth in explaining the evolution of the wealth distribution over the long run.

Key-findings

• The top 1% wealth share has fallen by half, from close to 50% in 1895 to 27% today. The interwar period and the wealth taxation in the aftermath of World War II stand out as the great equalizers in 20th century German history. (Figure 1)
• Since unification, average wealth nearly doubled for the 50-90% and more than doubled for the top 10%, while average wealth remained nearly stable for the bottom 50% (Figure 8a).
• After unification in 1990, households at the top made substantial capital gains from rising business wealth while the middle-class had large capital gains in the housing market. (Figure 10)

Figure

This figure demonstrates the decline and relative stability of the top 1% wealth share at the same time as the bottom 50% wealth share collapsed.

Authors

• Thilo N. H. Albers: Humboldt University Berlin; Lund University (alberstn@hu-berlin.de)
• Charlotte Bartels: DIW Berlin; UCFS; IZA (cbartels@diw.de)
• Moritz Schularick: University of Bonn, Sciences Po Paris, and CEPR (schularick@uni-bonn.de)

Media Contact

📲 Olivia Ronsain, communication manager: olivia.ronsain@psemail.eu; +33 7 63 91 81 68

Acknowledgements

The authors thank Luis Bauluz, Martin Biewen, Carola Braun, Timm Bonke, Edward Glaeser, Markus Grabka, Alice Henriques Volz, Hartmut Kaelble, Stephen Jenkins, Johannes Konig, Moritz Kuhn, Branko Milanovic, Salvatore Morelli, Filip Novokmet, Thomas Piketty, Alexander Reisenbichler, Ludwig Straub, Uwe Sunde, Katrin Tholen, Daniel Waldenstrom, and Gabriel Zucman for helpful comments. They also thank seminar participants at U Bayreuth, DIW Berlin, U Frankfurt, U Halle-Wittenberg, Harvard U, George Washington U and U St Gallen as well as conference participants of ECINEQ 2019, LAGV 2021, IIPF 2021, VfS 2021, the CRC Winter meeting 2021 and WID 2021. Can Aycan, Martin Kornejew, Theresa Neef, Christopher Promel, Timo Stieglitz, and Dominik Wehr provided outstanding research assistance. Schularick acknowledges support from the European Research Council Grant (ERC-2017-COG 772332). The project also received supported from the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) under Germany’s Excellence Strategy (EXC 2126/1 390838866). Albers gratefully acknowledges financial support by the DFG in the CRC TRR 190 (280092119).