Spatial income inequality in Germany, 1957-2021

We analyze income inequality between and within German regions from 1957 to 2021 using a newly collected panel. We confirm previous evidence on convergence between regions during the decades after World War II, but do not find pronounced regional divergence since the 1990s - in contrast to some earlier studies.

Instead, the national income inequality rise since the 1980s is closely tracked by the near-unanimous rise in income concentration within regions, driven by overproportional labor income growth of the top income decile. Regression analysis suggests that regional growth switched from equality-enhancing to inequality-increasing in the 1990s.

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