Category / inequality
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The “active pension” and its consequences
In future, pensioners will be able to earn up to 2,000 euros a month via the so-called “active pension.” This plan, by the German government, will offer tax-free income, even if the retiree already receives an old-age pension. Researchers have now taken a closer look at the consequences of this policy.
Until now, gainful employment beyond a “minijob” was not very attractive for pensioners. The aim of the active pension is to promote employment in old age and to make the transition between employment and retirement more flexible. The study shows that 234,000 taxpayers could claim an active pension in the future. However, those with a high total income, whose wage income is subject to high marginal tax rates and who have other income, e.g., from assets, will benefit in particular. For this reason, the researchers believe that inequality in society could increase further. Not all older people are able to continue working – many are hindered by care responsibilities or their own health impairments.Further information
Bach, S., Buslei, H., Geyer, J., Pieper, J.: Aktivrente entlastet vor allem besserverdienende Rentner*innen – mit unsicheren Beschäftigungseffekten. In: DIW Wochenbericht 25/2025, S. 395-402. (available in German only)
Süddeutsche Zeitung (17.06.2025): Kann die „Aktivrente“ halten, was sie verspricht? (available in German only)
Rheinische Post (18.06.2025): „Aktivrente entlastet vor allem Besserverdienende“ (available in German only)
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Whether we own a house depends on our parents
The proportion of homeowners in Germany is very low compared to other OECD countries. One thing is certain: people whose parents belong to a higher social class are more likely to become homeowners than those whose parents are from a lower social class. This favors further inequalities, especially in the development of wealth.
Based on data from “Living in Germany,” researchers investigated the role played by the transfer of wealth to the younger generation; for example, in the form of inheritances and gifts. The result: these transfers promote home ownership to a high degree, often within just one year. Even if it is only expected that a transfer of parental wealth is imminent in the future, home ownership becomes significantly more likely.Further information
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Fewer people in the low-wage sector, risk of poverty decreases
The low-wage sector in Germany continues to shrink. This is the result of a recent analysis of gross hourly wages and net household incomes using “Living in Germany” study data. In 2022, only 18.5 percent of all employees were primarily employed in the low-wage sector – the lowest figure since the turn of the millennium. In eastern Germany, the proportion fell by 14 percentage points to 24 percent.
The rapid rise in inflation has caused gross hourly wages to fall overall, but not in the low-wage sector. In 2022, the low-wage threshold was 13.60 euros gross per hour. According to study author Markus M. Grabka (a SOEP researcher), the risk of poverty has also continued to fall, particularly in eastern Germany and among single parents.Further information
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Women at a disadvantage when building wealth
Women are known to be disadvantaged in the labor market due to the so-called “gender pay gap”: There is a gap of up to 18 percent between the average income of men and women, as previous findings from “Living in Germany” show. Researchers have now investigated the extent to which there are also differences between the sexes when it comes to wealth and asset accumulation.
Over a longer period of time, a clear result emerges: men and women accumulate wealth differently during their lifetime. On average, men receive more wealth in the form of gifts and inheritances during their working lives than women. The latter only inherit larger sums later in life, mainly due to the death of their spouses. In contrast to men, they have fewer opportunities to increase their wealth early on, for example by making long-term investments or becoming entrepreneurs.Further information
Charlotte Bartels, Eva Sierminska, Carsten Schröder: Wealth Creators or Inheritors?
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![Älterer Mann sitzt am Tisch vor Geldbeutel und einigen Münzen.]()
High inequality despite rising wages
Only 10% of households in Germany have 56% of the wealth. This means that Germany performs poorly in terms of inequality in a European comparison. Average household net wealth increased by 39% in real terms between 2011 and 2021. However, gifts and inheritances in particular ensure an unequal distribution of wealth across generations.
Even the positive income trend in past years has not been able to reduce the population’s risk of poverty. In 2022, around 15 percent of households were living below the at-risk-of-poverty threshold (one-person household: €1,200 net household income per month, two-person household with child: €2,160). The findings on poverty in old age are also worrying: in eastern Germany, for example, one in four people aged 60 to 79 is at risk of poverty.Further information
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Short-term work during the pandemic
What impact did short-time work have on employees during the coronavirus pandemic? One study comes to a clear conclusion: short-time work was an “effective instrument to contain the consequences of the economic slump on the labor market,” according to Clara Schäper, one of the authors of this study. Together with Katharina Wrohlich, she analyzed data from the Socio-Economic Panel (SOEP).
Between March 2020 and March 2021, an average of 3.6 million employees per month were on short-time work. A representative survey showed that women were sent on short-time work more often than men. Overall, however, inequality on the labor market did not increase. Those who were on short-time work in 2020 were on average no more likely to become unemployed in the following year than employees not affected by short-time work – regardless of whether they were men or women.
People without access to short-time work, especially “mini-jobbers” and the self-employed, were sometimes hit very hard by the economic impact of the pandemic.Further information
Süddeutsche Zeitung: Kurzarbeit schadet der Karriere nicht (for subscribers)
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![Frau sitzt mit Tasse in der Hand und Kopfhörern zu Hause vor dem Computer]()
Reducing the risk of infection for all population groups
Researchers have found that people with socio-economic disadvantages are more likely to have contracted the coronavirus. But does this also apply if they work from home? Researcher Markus M. Grabka and colleagues from the Socio-Economic Panel (SOEP) analyzed data from a survey conducted with the Robert Koch Institute. They compared the risk of infection among people in Germany with lower and higher levels of education who work from home. The result: working from home reduces the risk of infection, especially among people with lower levels of education – an important finding for future pandemic prevention, according to the researchers.
Further information
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