East Germans Still at Disadvantage Compared to West Germans
ResearchDevelopment of Equal Opportunity in Germany
Anyone who lived in East Germany before reunification still has narrower income chances 30 years later than a person of the same age and similar family circumstances from West Germany. Along with regional origin, however, the education level and occupation of the parents also play an important role in determining someone’s income chances. Overall, the observed inequality of opportunity in Germany has not decreased since the early 1990s, but has instead slightly increased. These are the results of a study by ZEW Mannheim and the University of Florence as part of the research programme Strengthening Efficiency and Competitiveness in the European Knowledge Economies (SEEK).
The researchers examined how the inequality of opportunities in Germany has developed between 1992 and 2016, looking exclusively at individuals who lived through 1989. They used machine-learning techniques to find out which characteristics determined differences in income opportunities, with the Socio-Economic Panel (SOEP) serving as a basis of data.
From 1992 to 2001, whether a person originally resided in East or West German states was the decisive factor in determining unequal opportunities in Germany. At the beginning of the 1990s, the income of citizens in East Germany was below 80 per cent of the national average for the respective age group. Along with regional origin, the father’s occupation also proved crucial for income opportunities of East Germans, whereas for West Germans it was the father’s level of education.
Inequality of opportunity in 2016 slightly higher than in 1992
“Today, the father’s profession is the most important factor in determining the income opportunities of citizens in Germany,” says Dr. Guido Neidhöfer, researcher in ZEW’s Research Department “Labour Markets and Human Resources”. “In second place, however, is still the factor of whether someone comes from East or West Germany. But gender, the mother’s level of education, as well as disabilities also influence equal opportunity. Nowadays, West Germans with parents in higher-up professional positions, and whose mothers obtained a high education level, have the best income chances, while East Germans with parents who have little or no educational qualifications have the worst chances.”
Similar to citizens from East Germany, migrants who immigrated after 1989 have on average lower incomes than West Germans. This does not apply, however, to migrants and their children who had already been living in Germany before 1989. They are no different from their peers, who correspond to them in terms of the profession and education of their parents, and any disabilities present.
As the study shows, the inequality of opportunity in Germany declined between the early and mid-1990s, which lies contrary to the increasing wage inequality in the 1990s. A possible explanation could be state redistribution measures. The inequality of opportunity increased slightly between 1996 and 2001, markedly in 2002, slightly again in 2006, and has remained at this higher level ever since. This increase coincides with the Hartz reforms of the benefit system. The financial crisis of 2008/09 does not appear to have had any effect on the distribution of income opportunities in Germany, though. The inequality of opportunity for 2016 was slightly higher than in 1992.
