Income distribution and macroeconomic imbalances

– Macroeconomic effects of increasing inequality:

– Functional income distribution (wages vs. profits)

– Personal income distribution (inequality of the Household income)

– Sectoral perspective

– Effects of increasing income inequality on sectoral

Financial balances (FS) and current account balances (LB)?

The following applies: Net lending to households

+ Financing Balance

+ Net lending state

= Current account balance

A closer look at the USA

– Increase in top income shares and decrease in FS of households

– Relatively stable development of the wage share

What are the average incomes and income differences between different social groups?

In 2016, the median net equivalised income in Germany was 21,275 euros. After that, one half of the population had at least 21,275 euros available, the other half less. By contrast, the mean net equivalised income was € 24,020. In 2015, the median income was still 20,668 euros and the average income 23,499 euros; In 2008 the figures were 18,309 euros (median value) and 21,086 euros (average value).

Primary and secondary distribution

The primary distribution results directly from the production process. It reflects the remuneration of the factors of production labor and capital. Generally considered are gross income from employment, self-employment and wealth. As a result of the state redistribution of income through taxes and transfers, primary distribution becomes secondary distribution. The state distributes part of its revenue from taxes and social security contributions as social transfers, as cash benefits (such as housing allowances), or as real benefits (for example, in the form of study or discounted kindergarten places).

Functional income distribution

With the functional income distribution one tries to assign the national income to the production factors work and capital. The best known indicator of the functional income distribution is the so-called wage rate. It indicates the share of employee compensation in the total national income. However, the informative value of the wage share has declined because many households receive additional income in addition to the salary, such as interest income. Around 40 percent of all property income is now accounted for by employee households.