study
Large regional differences in disposable income
According to the WSI study, the city of Heilbronn is the front runner when it comes to comparing incomes among all 401 German administrative districts and urban districts. Photo: Christoph Schmidt/dpa
© dpa-infocom GmbH
The income gap between East and West, North and South is still considerable in Germany. The difference between the leader and the tail is more than 25,000 euros.
The regional differences in income in Germany are still considerable. This is the result of a recent study by the Economic and Social Sciences Institute (WSI) of the trade union-affiliated Hans Böckler Foundation.
According to the study, Heilbronn was the front runner among all 401 German administrative districts and urban districts – with an average disposable per capita income of 42,275 euros. The district of Starnberg followed in second place with 38,509 euros. For comparison: in the bottom places, Gelsenkirchen and Duisburg, the per capita income was not even half as high at 17,015 euros and 17,741 euros respectively. According to the study, the average available per capita income nationwide was 23,706 euros.
In their study, the WSI experts based their analysis on the latest available data from the national accounts of the countries for 2019.
One result: the income gap from west to east has not disappeared more than three decades after reunification. According to the WSI, there is only one district in the new federal states, Potsdam-Mittelmark (24,127 euros), in which the disposable per capita income exceeds the average for the Federal Republic of 23,706 euros.
In the old federal states there is also a north-south divide. On average, the per capita income in Bavaria and Baden-Württemberg is about 2,600 euros higher than in the rest of western Germany, the researchers reported.
Partly influenced by individual wealthy households
The scientists emphasized that, particularly in some smaller towns or rural areas with very high incomes, the average income is also noticeably influenced by a manageable number of very wealthy households. Heilbronn’s top position in the income ranking is probably not least due to the owner of a large German discounter chain based in the region and his foundations.
However, according to the WSI, the effects of the differences in disposable per capita 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 child benefit, unemployment benefit or pension payments, makes a significant contribution to equalizing incomes in Germany,” emphasized the WSI researchers. This also contributes to the fact that the living conditions in Germany do not diverge significantly further from region to region.
In addition, according to the study, the regional differences in price levels also contribute to a certain leveling out of incomes. 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.
The scientists understand disposable income to be primary income, as the sum of income from property and employment minus social security contributions, income taxes, wealth taxes and other direct taxes. They include social benefits and other public transfers. In addition, benefits such as motor vehicle or liability insurance are added. The result is the disposable income of private households at the place of residence that can be used for consumption or saved. Finally, disposable income was divided by total population to get per capita income.