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ifo Institute: Regional Inequality in Germany Drops

Summary:
Regional inequality in Germany has fallen, according to a new analysis by the ifo Institute. “The economic power of Germany’s 402 administrative districts measured by their per capita gross value added, was far more equitably distributed in 2014 than in 2000,” notes Gabriel Felbermayr, Director of the ifo Center for International Economics. “This also applies to the 1,300 EU regions, although an increase in regional inequality can be seen within the old EU 15 states”, he adds. “Overall, progressive taxes and government transfers mean that differences in disposable income are far lower than those in gross value added. In Germany they are at least a third lower and fell significantly in 2000-2014. The statement sometimes made

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Regional inequality in Germany has fallen, according to a new analysis by the ifo Institute.

“The economic power of Germany’s 402 administrative districts measured by their per capita gross value added, was far more equitably distributed in 2014 than in 2000,” notes Gabriel Felbermayr, Director of the ifo Center for International Economics. “This also applies to the 1,300 EU regions, although an increase in regional inequality can be seen within the old EU 15 states”, he adds. “Overall, progressive taxes and government transfers mean that differences in disposable income are far lower than those in gross value added. In Germany they are at least a third lower and fell significantly in 2000-2014. The statement sometimes made that German is one of the countries with the greatest regional contrasts is also a fallacy. Regional inequality in disposable income in Germany is lower than in all large EU states. In other words, the figures do not support the assertion that globalisation has resulted in growing inequality in regional income, nor do they justify demands for greater regional distribution, either in Germany or in the EU.”

Felbermayr adds: “These conditions are not set in stone. Although the independent town of Wolfsburg was Germany’s richest town in both 2000 and 2014 in terms of economic power per capita, it was followed by a diverse mix of administrative districts in the top 20 ranking. Munich, for example, dropped from rank 7 to 13, while Dusseldorf fell from 5 to 10, the district of Munich from 2 to 3, and Frankfurt am Main from 3 to 5. At the same time, Ingolstadt stormed from 14 to 2, Schweinfurt from 11 to 4 and Coburg from 29 to 9. In general terms, the greatest economic growth took place in those regions that had not yet reached the top of the ranking in 2000.”  

Ranking of 402 German districts (in German)

ifo Rangliste deutsche Kreise (PDF, 78 KB)

Publication (in German)

  1. Braml, Martin and Gabriel Felbermayr, "Regionale Ungleichheit in Deutschland und der EU: Was sagen die Daten?", ifo Schnelldienst 71 (07), 2018, 37–49 | 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.

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