A0672
Title: The rich and the rest: A distributional approach to wealth inequality regimes in Germany
Authors: Jan Schulz - Otto-Friedrich-University of Bamberg (Germany) [presenting]
Abstract: The German wealth distribution is analyzed by using microdata from the \textit{Socio-Economic Panel} and the list of the $500$ richest Germans by the \textit{manager magazin}. It replicates the finding of two decoupled distributional regimes in wealth distributions already established in the literature for other countries and sample periods as a thermal distribution with a superthermal knee. A theoretical explanation grounded in maximum entropy considerations is provided based on the different asset types the population of both regimes holds that is able to fully qualitatively explain the emergence of this structure without resorting to questionable assumptions about differences in human characteristics. The estimation reveals a comparatively high degree of inequality in both regimes at odds with conventional wisdom about wealth inequality in Germany. An analysis of mobility patterns shows furthermore that in-sample mobility is associated with the inequality of the respective distributional regime implying that inequality cannot be outweighed by a notion of equality of opportunity. Finally, a novel method is presented to cope with the problem of the missing rich prevalent in wealth data, that is, underreporting in the highest wealth regions, through extrapolating from the data not significantly affected by differential non-response using a simple scaling factor.
