The income gap in Germany is still considerable. The average disposable per capita income is the lowest in two cities in the Ruhr area.
Regional income differences in Germany are still considerable. According to a recent study by the trade union-affiliated Hans Böckler Foundation’s Economic and Social Science Institute (WSI), the median disposable income per capita is the lowest in Gelsenkirchen and Duisburg, at € 17,015 and € 17,741 respectively.
According to the study, Heilbronn was the leader in the income rankings of all 401 German administrative and urban districts with an average disposable income per capita of 42,275 euros. The Starnberg district follows in second place with 38,509 euros. The average per capita disposable income for the two leaders was more than double that of the latest Ruhr area results.
According to the study, the median per capita disposable income nationwide was 23,706 euros. In their study, the WSI experts based their analysis on the latest data available from the country’s national accounts for 2019.
People in southern Germany have more than those in the west
Further study findings: The west-east income gap did not disappear more than three decades after reunification. According to the WSI, there is only one district in the east, Potsdam-Mittelmark (€ 24,127), where per capita disposable income exceeds the Federal Republic’s average of € 23,706.
In the old federal states there is also a north-south division. On average, per capita income in Bavaria and Baden-Württemberg is around € 2,600 more than in the rest of West Germany. Scientists pointed out that, particularly in some smaller cities or rural areas with very high incomes, average income is also greatly affected by a manageable number of very wealthy households.
Heilbronn’s top position in the income rankings is probably due not least to the owner of a large German discount chain based in the region and its foundations. However, according to the WSI, the effects of differences in per capita disposable income are somewhat reduced by state redistribution through taxes and social benefits.
“The analysis shows that the system of state taxes and transfers, which include family allowances, unemployment benefits or pension payments, contributes significantly to income equalization in Germany,” the WSI researchers pointed out. This also contributes to the fact that living conditions in Germany do not diverge further from region to region.
Alignment across regionally different price levels
Furthermore, regional differences in price levels also contribute to some leveling of incomes, according to the study. High-income regions also tended to have higher rents and other prices. “People will then have more money in their wallets, but they won’t be able to afford more to the same extent,” explains WSI scientist Toralf Pusch.
Scientists believe that disposable income is primary income, which is the sum of income from activity and employment minus social security contributions, income taxes, wealth taxes and other direct taxes. They include social benefits and other public transfers.
In addition, services such as auto insurance or civil liability are added. The result is the disposable income of private households in the place of residence which can be used for consumption or saved. Finally, the disposable income was divided by the total population to obtain the per capita income.