The Trends of Income Distribution in West Germany

Abstract

Empirical investtigation into the growth and distribution of national income in the long term runs into greater difficulties in Germany than elsewhere. The particularism of individual Federal States with their different tax systems, the two World Wars, the subsequent extremes of inflation and repeated territorial changes, combined with long-lasting scepticism on the part of theorists and official statisticians with regard to such enquiries have left us today with at the best fragments of a reliable picture of national income accounts.1 The Statistisches Reichsamt (Reich Statistical Office) calculated the national income of the German Reich for the first time in 1925, and thereafter continuously until 1940. The method used was based in the main on income distributed, which means that detailed information on income distribution is given. The Statistisches Bundesamts (Federal Statistical Office), however, has based its national income calculations since 1950 mainly on the net output method.2 Distribution aspects play a secondary role and the information given is less detailed than in the pre-war period — much to the annoyance of distribution theorists. The following is an attempt in the face of these difficulties to make a reasonably accurate reconstruction of the trends of ‘functional’ income distribution in Germany since about 1875.