Wealth In Germany Research Articles

The Joint Distribution of Net Worth and Pension Wealth in Germany

Research on wealth inequality usually focuses on real and financial assets, while pension wealth – the present value of future pension entitlements from public and company pension schemes – receives little attention. This is astonishing, given that pension plans play an important role for material security and well‐being for an overwhelming part of the population and, thus, should be accounted for in peoples’ wealth portfolios. Using novel data from the Socio Economic Panel (SOEP), we show the incidence, relevance, and distribution of individual pension wealth, net worth, and augmented wealth (the sum of the two) in Germany. Further, we investigate age‐wealth‐profiles and differences between East and West Germany.

Regional resources buffer the impact of functional limitations on perceived autonomy in older adults with multiple illnesses.

Retaining perceptions of autonomy is a key component of successful aging. Perceived autonomy refers to the capacity to make and enact self-directed decisions. These perceptions are often threatened in older adults with multiple illnesses, when functional limitations resulting from these illnesses impede the enactment of self-directed decisions. Regional resources (in Germany specifically at the level of administrative districts) might counteract these impediments of autonomy. Economically stronger districts can provide more-concrete support resources for older adults, buffering the negative effect of functional limitations on self-perceived autonomy. This study assessed participants aged over 65 with 2 or more chronic conditions. In total, N = 287 provided data (Mage = 73.3, SD = 5.07), and n = 97 were women. Gross domestic product (GDP) per capita was used as a proxy measure of administrative district wealth in Germany. Hierarchical multilevel regression analyses with cross-level interactions were conducted. Results suggest that the detrimental effect of functional limitations on perceived autonomy is less pronounced for participants residing in higher GDP districts. Conversely, for participants in lower GDP districts, the effect is exacerbated. This finding suggests that districts with greater financial resources might be better able to invest in supports that promote and facilitate autonomy and, thus, provide a buffer against threats to individual perceived autonomy.

The Top Tail of the Wealth Distribution in Germany, France, Spain, and Greece

We analyze the top tail of the wealth distribution in Germany, France, Spain, and Greece based on the Household Finance and Consumption Survey (HFCS). Since top wealth is likely to be underrepresented in household surveys we integrate the big fortunes from rich lists, estimate a Pareto distribution, and impute the missing rich. Instead of the Forbes list we mainly rely on national rich lists since they represent a broader base for the big fortunes. As a result, the top percentile share of household wealth in Germany jumps up from 24 percent in the HFCS alone to 33 percent after top wealth imputation. For France and Spain we find only a small effect of the imputation since rich households are better captured in the survey. The results for Greece are ambiguous since the data do not show clear concentration patterns.

Fraud characteristics and their effects on shareholder wealth

This study examines characteristics of fraud cases and their effects on shareholder wealth in Germany. Using a sample of 126 fraud cases of listed German firms that became public between 1998 and 2014, we provide evidence that shareholder value decreases significantly in the days surrounding the revelation of a fraud case. Our analysis shows that shareholder wealth losses are remarkable, with a mean (median) loss of 80.78 million euros (47.03 million euros). Further, we find that the characteristics of fraud cases affect the financial consequences to investors. Our results indicate that shareholder wealth decreases more if at least one board member resigns due to the fraud case, but less if firms identify and reject accountable employees. Moreover, shareholder wealth decreases less if firms are willing to cooperate with legal authorities. Exploratory analysis suggests that reputational penalties are considerable for German firms. Our study contributes not only to accounting and corporate governance theory but also to practice in a number of ways. Our results reveal areas that are particularly important for regulators and where effective internal control systems are particularly beneficial. Further, our study identifies critical aspects that firms should consider in their communication with investors when fraud occurs.

The Phf: A Comprehensive Panel Survey on Household Finances and Wealth in Germany

The Panel on Household Finances (PHF) is a new panel survey on household finances and wealth in Germany conducted by the Deutsche Bundesbank. It covers the balance sheets, pension claims, savings, incomes and work histories of households, together with some information on consumption patterns, attitudes, expectations and standard demographic characteristics. This paper introduces the survey, highlights its main methodological features and presents initial results. The first wave of the survey was carried out between September 2010 and July 2011. It encompasses a net sample of 3,565 randomly selected households in Germany. Wealthy households are oversampled using micro-geographic indicators. The survey is designed to be a full panel. The micro data will be made available for scientific use. The next wave is scheduled for 2014. Aside from being a self-contained and comprehensive survey on household finances in Germany, the PHF is part of the Household Finance and Consumption Survey (HFCS). This system of surveys collects ex ante harmonised micro data in every country of the euro area.

Extending the Empirical Basis for Wealth Inequality Research Using Statistical Matching of Administrative and Survey Data

Social security entitlements are a substantial source of wealth that grows in importance over the individual’s lifecycle. Despite its quantitative relevance, social security wealth has been thus far omitted from wealth inequality analyses. In Germany, it is the lack of adequate micro data that accounts for this shortcoming. The two main contributions of this paper are: First, to elaborate a statistical matching approach that complements information on net worth as surveyed in the German Socio-Economic Panel (SOEP), a population representative panel study, with information on social security wealth from the Sample of Active Pension Accounts (SAPA), a large-scale administrative dataset maintained by the German Statutory Pension Insurance. Second, we show to what extent the inclusion of social security wealth affects the level and the distribution of individual net worth as well as overall inequality. The present value of pension entitlements (including entitlements from the statutory pension system as well as from the separate system for civil servants) amounts to 5.6 trillion Euros, which corresponds to an average of 78,500 Euros per person – thus almost doubling the level of net worth. Compared to results based on net worth only, inequality of our amended wealth measure is about 25 percent less. Moreover, we present significant differences in pension entitlements across occupational groups with civil servants gaining most from the inclusion of public pension wealth in the extended wealth measure and self-employed benefiting the least. Overall, our results provide clear indication for the relevance of including the notional wealth held in pension entitlements providing a less biased picture of the level and the socio-economic structure of wealth in Germany. Above and beyond such within-country variation, our findings may also be most relevant for comparative analyses across welfare-regimes.

Inequality of the Distribution of Personal Wealth in Germany 1973-1998

This paper attempts to define financial globalization as a process whereby financial markets internationally are integrated so closely that they can be considered as a single market. The process, viewed as a by- product of financial liberalization, is only a necessary condition for financial globalization, however. The sufficient condition is the creation of world-wide single currency, managed and regulated by a single international monetary authority. The system itself needs to be managed carefully to avoid the kind of crises countries have experienced over the last 30 years or so. This sufficient condition has not yet been met.

Bequests and Aggregate Wealth Accumulation in Germany

This paper estimates the proportion of current wealth in Germany which is generated by intergenerational bequests. It begins with the flow-of-bequests approach which cumulates annual flows of bequests into a stock of transfer wealth. Assuming exponential growth of the economy, inherited wealth accounts for about 35 per cent of total wealth in Germany, a figure comparable to that obtained for other countries. However, the assumptions underlying this estimate are inappropriate for Germany, because they fail to take account of the special circumstances of the postwar period. Modifying the flow-of-bequests method to allow for these special circumstances reduces the share of inherited wealth to about 10 per cent, surprisingly low in comparison to other countries. To confirm this result, a further method was developed based on a regression model of wealth as a function of socio-economic variables. The wealth of the nation is estimated with bequests included, and the contribution of bequests is then calculated by setting bequests equal to zero. This result again produces a share of about 10 per cent for inherited wealth, making this figure the most plausible value for Germany in the 1980s. However, the share can be expected to increase in future.

P-star as a link between money and prices in Germany — A comment

T he paper by T6dter and Reimers shows a convincing application of the P-Star measure to Germany. The main difference of their model to that developed by Hallman et al. (1989, 1991) for the U.S. is an extension to account for the long-term decline of velocity observed in Germany, which the authors attribute to, among other things, wealth effects. If wealth influences the demand for money, and income and wealth are cointegrated, T6dter and Reimers' model indeed represents the reduced form of a more comprehensive model. However, if income and wealth are not cointegrated, their empirical estimates are likely to be suboptimal. Empirical evidence presented in the following suggests that there is reason to doubt the cointegration of income and wealth in Germany, and that a wealth variable should be explicitly incorporated into the P-Star model. When wealth effects on the demand for money are taken into account, inflationary pressures as measured by the so-called price gap at times differ from those estimated with the simple P-Star model. Unfortunately, application of the extended P-Star model for policy purposes is more cumbersome. At the same time, however, the German monetary authorities' claim that the distinction between "money" and wealth has become blurred recently makes an explicit modelling of wealth effects important. In the absence of such an extended framework, policymakers may not be able to resist the temptation to make notional adjustments for wealth effects to their monetary targets.

Wealth in Germany

Wealth in Germany

Turkish labour migration to Germany: impact on both economies

The aim of this paper is to show the impact of Turkish labour migration. While in the past the topic has been mainly discussed with respect to either the German or the Turkish economy, this is an attempt to show and evaluate the impact on both economies simultaneously. Looking at earlier discussions only from the German point of view, it seems as if the attitude to the problem is closely related to Germany's business cycles. In the early 1960's, during the period of fast economic growth, most authors mainly emphasized the advantages of labour migration. In the recession of 1966/1967, Carl F6hlI pointed out that the use of migrant workers might have highly adverse effects for the host country. Yet the following economic recovery dampened Fohl's ideas and again authors pointed out the good points of labour migration. Today, amid an economic slow-down, a new discussion has started about the effects of mass transfers of workers to Germany.2 Economists are increasingly doubtful about the long-term usefulness of foreign workers. To demonstrate the advantages and disadvantages, it seems necessary to begin with a general discussion of the demand for and supply of Turkish migrant workers. Given the market situation for Turkish workers as a base, the impact of labour migration to Germany can be evaluated by the testing of the following hypotheses: First, it is advantageous for the German economy to employ Turkish and other foreign workers, because (1) it increases wealth in Germany, (2) it keeps wages and prices relatively stable, and (3) it helps to maintain full employment. Second, it is advantageous for the Turkish economy to allow workers to go abroad for employment, because (1) they get professional training, (2) they earn foreign exchange, (3) the domestic unemployment rate is reduced, (4) Turkey's wealth increases, and (5) it reduces social and economic conflicts.