Friday , August 17 2018
Home / IFO Hans-Werner Sinn & Clemens Fuest / ifo: Making it Easier for More People to Accumulate Wealth

ifo: Making it Easier for More People to Accumulate Wealth

Summary:
The ifo Institute has called on the German government to fight inequality by making it easier for the majority of citizens to accumulate wealth; and to stop abruptly cutting off social benefits at certain income levels. “By international comparison inequality in Germany is only moderate and its welfare state works fairly well on the whole. As far as income is concerned, inequality is offset by redistribution via social benefits. In terms of assets, it is reduced via the statutory pension scheme. The poorest 70 percent of the population stands to gain from their pension entitlements,” explains Andreas Peichl, Director of the ifo Center for Macroeconomics and Surveys. But there is still room for improvement. According to Peichl:

Topics:
Clemens Fuest considers the following as important:

This could be interesting, too:

Clemens Fuest writes CESifo Newsletter 2018/06

Clemens Fuest writes Selon l’Institut ifo, le climat économique mondial se détériore à nouveau

Clemens Fuest writes ifo World Economic Climate Deteriorates Further

Clemens Fuest writes ifo : Améliorer la constitution de patrimoine pour le grand public en Allemagne

The ifo Institute has called on the German government to fight inequality by making it easier for the majority of citizens to accumulate wealth; and to stop abruptly cutting off social benefits at certain income levels.

“By international comparison inequality in Germany is only moderate and its welfare state works fairly well on the whole. As far as income is concerned, inequality is offset by redistribution via social benefits. In terms of assets, it is reduced via the statutory pension scheme. The poorest 70 percent of the population stands to gain from their pension entitlements,” explains Andreas Peichl, Director of the ifo Center for Macroeconomics and Surveys. But there is still room for improvement. According to Peichl: “Germany needs wealth accumulation based on the Scandinavian model. In other words, it needs an obligatory, privately-funded form of pension provision that differs from the Riester scheme, which only benefits insurance companies and intermediaries.”

By international comparison, Germany spends a great deal on higher education, but too little on early childhood education, he adds. Germany also needs to improve its reintegration of long-term unemployed persons into the labour market by encouraging them to gain better qualifications and complete further training. In Peichl’s view, “Politicians also need to remove the absurd barriers to more job opportunities for lower income earners. Abruptly cutting off social benefits when certain income levels are reached means that, in some cases, workers earn a higher gross wage, but lower net income. This particularly applies to single parents and is one of the main reasons for child poverty in Germany. Various public institutions need to work together on a comprehensive reform of taxes, welfare benefits and spending with a view to smoothing out the inequality curve and reducing the burden on low-income earners.”

Publication (in German)

  1. Peichl, Andreas and Marc Stöckli, "Ungleichheit und Umverteilung in Deutschland: Trends und Handlungsoptionen", ifo Schnelldienst 71 (15), 2018, 18–22 | Details | PDF Download

Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

Leave a Reply

Your email address will not be published. Required fields are marked *