This Master's thesis aims to address the in the media, politics and academia recurring issue of economic inequality against the background of the Corona crisis in Germany. Through a deductive literature analysis, the research question to what extend the economic inequality in Germany changed during the Corona crisis is answered. Due to the Corona pandemic that broke out in March 2020, almost all countries in the world were forced to contain the spread of infections as quickly as possible to not overburden healthcare systems. Severe restrictions were imposed almost worldwide, in some cases lasting already several months. In Germany two phases of severe residual restrictions, one beginning in March 2020 and another beginning in October 2020, also have persistently brought public life to a virtual standstill, thus having a considerable impact on the corresponding economic strength.
In addition to growth losses, high national debts, and other socioeconomic consequences the redistribution of economic assets and change in economic inequality has been controversially discussed in academia as well as in the media and thus crystallised as a current problem statement for science and politics. Regarding the state of research, it can be noted that representative surveys and studies of income distribution have published valid results and analyses in relation to the Corona crisis. The longer-term effects of wealth distribution are less well researched at this point of time. This paper incorporates published data and studies up to May 2021.
Table of Contents
1 Introduction
1.1 Research questions and hypotheses
1.2 Methodology and data basis
2 The term inequality and its key figures
2.1 The concepts of income
2.1.1 Market and net income
2.1.2 Net equivalence income
2.2 The concept of wealth
2.3 The concept of poverty
2.4 Gini coefficient and other indicators
3 Framework and Development of economic inequality in Germany
3.1 Economic framework in Germany
3.1.1 Solid economic growth until the Corona crisis
3.1.2 Labour market situation and the importance of short-time work
3.1.3 Distribution of national income
3.2 Income inequality in Germany
3.2.1 Development of net equivalised disposable income
3.2.2 Decline in wage inequality with gender pay gap remaining
3.2.3 Development of the Gini coefficient and other indicators
3.2.4 Trends in income poverty
3.2.5 Decrease in material deprivation
3.2.6 Developments at the upper end of the income distribution
3.3 Asset distribution in Germany
3.3.1 Gini coefficient and percentile distributions
3.3.2 Relationship between income and assets
3.3.3 Asset distribution in international comparison
4 Changes in economic inequality due to the Corona crisis
4.1 Short-term effects on the labour market
4.1.1 The significant role of short-time allowances
4.1.2 Marginally employed persons face major challenges due to the crisis
4.2 Effects on market and disposable household income
4.3 The Gender Pay Gap in the Corona Crisis
4.4 Income inequality during the Corona pandemic in Europe
4.5 Short-term effects on asset distribution
5 Policy instruments to reduce economic inequality
5.1 Financial support for the self-employed persons
5.2 Assistance for marginally employed persons
5.3 Spreading the costs of the pandemic fairly
6 Limitations
7 Conclusion
Research Objectives and Thematic Focus
This thesis investigates the extent to which Corona-related restrictions altered economic inequality in Germany and evaluates potential policy approaches to mitigate undesirable consequences. It centers on the impact of the pandemic on labor market dynamics, income distribution, and asset concentration.
- Analysis of short-term labor market effects, including unemployment and short-time work.
- Evaluation of changes in income distribution across different deciles during the pandemic.
- Examination of the gender pay gap and its exacerbation during the crisis.
- Assessment of asset inequality and the potential for increased concentration of wealth.
- Review of policy instruments for financial support for the self-employed and marginally employed.
Excerpt from the Book
4.1 Short-term effects on the labour market
Blom and Möhring (2021, p. 482) were able to identify the first correlations between unemployment, short-time work, home-office possibility and income group already in the early phase of the pandemic: The number of people in short-time work in the lower income group (up to €1,000 net per month) was only 3.3% in March 2020 and then increased as the pandemic progressed, reaching 5.9% in May.
This group was the most affected by unemployment and leaves of absence. Unemployment as a share of the total income group was 1.8% in March 2020 and 3.2% in May 2020. In addition, almost a quarter of workers were on layoff in March 2020, 7% of them without pay.
For the middle-income group (1,000€ - 2,500€ net per month), the share of people on short-time work also increased from 4.1% in March to 12.5% in May. The share of people in short-time work was thus twice as high as of the lower income group in May.
Similar patterns emerge for the home-office possibility: The share of those in home-office was 13.1% for the lower income group in March and 2.1% in May. The figures for the middle- and upper-income group (€2,500 net per month and above) were significantly higher in March (18.3% and 40.1% respectively) and May (7.4% and 18.4% respectively). Unemployment, on the other hand, was negligible in the upper income group (€2,500 net per month and above) during the first period of the pandemic (ibid).
Summary of Chapters
1 Introduction: Introduces the Corona pandemic's impact on economic inequality in Germany and outlines the research questions and hypotheses.
2 The term inequality and its key figures: Defines the fundamental concepts of income, wealth, and poverty, alongside indicators like the Gini coefficient.
3 Framework and Development of economic inequality in Germany: Details the economic climate, labor market conditions, and pre-pandemic trends in income and asset distribution in Germany.
4 Changes in economic inequality due to the Corona crisis: Analyzes the pandemic's impact on unemployment, income, gender gaps, and asset distribution.
5 Policy instruments to reduce economic inequality: Discusses measures for supporting self-employed and marginally employed persons and strategies for equitable pandemic cost-sharing.
6 Limitations: Addresses scientific limitations such as data source constraints and the lack of a longitudinal perspective.
7 Conclusion: Summarizes the key findings and concludes that while income inequality decreased temporarily due to social security, long-term risks to asset equality remain.
Keywords
Economic inequality, Corona crisis, Germany, Gini coefficient, labor market, short-time work, income distribution, asset distribution, poverty, wealth, social security, self-employed, marginally employed, gender pay gap, fiscal policy.
Frequently Asked Questions
What is the core focus of this Master's thesis?
The thesis examines the economic consequences of the Corona pandemic in Germany, specifically investigating how the crisis influenced economic inequality and the widening gap between different income groups.
What are the primary themes discussed in the work?
Key themes include labor market shifts, the efficacy of short-time work schemes, income and asset distribution trends, the gender pay gap, and the role of social security policy during economic crises.
What is the primary research question?
The central question asks to what extent Corona-related restrictions led to changes in economic inequality in Germany and which policy approaches could counteract resulting undesirable inequalities.
Which methodology is employed in this study?
The author uses a deductive literature analysis of current studies, including data from the Socio-Economic Panel (SOEP), the Hans-Böckler-Stiftung, and the Institut der deutschen Wirtschaft, complemented by an expert interview.
What topics are covered in the main section of the paper?
The main section covers the pre-pandemic economic framework in Germany, the specific short-term labor market effects of the crisis, the impact on household incomes, and the analysis of asset distribution and relevant policy instruments.
Which keywords best characterize this research?
The work is characterized by terms such as Economic inequality, Corona crisis, Gini coefficient, labor market, income distribution, asset distribution, and social security policy.
How did the Corona crisis affect the self-employed compared to other workers?
The research indicates that the self-employed suffered the most significant relative income losses because, unlike dependent employees, they were not entitled to standard short-time allowances and often received insufficient state financial aid.
Why did income inequality potentially decrease during the pandemic?
Despite significant market income losses, disposable household income inequality slightly decreased due to robust social security systems, state transfer payments, and the fact that high-earning self-employed individuals bore the brunt of the losses.
What is the author's conclusion regarding the long-term effects on wealth inequality?
The author warns that while income inequality showed a short-term decrease, asset inequality likely increased because the wealthy could grow their assets through financial markets and real estate, while poorer individuals lacked the opportunity to save.
What policy instruments does the author suggest to mitigate inequality?
Recommendations include more effective taxation of corporate profits, a potential reintroduction of an asset tax, and improved financial support mechanisms specifically designed for the self-employed and those in precarious employment.
- Citar trabajo
- Julian Horn (Autor), 2021, Did the Corona Crisis widen the gap between rich and poor? An Analysis of Economic Inequality in Germany during the Corona Crisis, Múnich, GRIN Verlag, https://www.grin.com/document/1165748
