Income distribution in Germany: The round trip

In the period 1998-2019, income distribution in Germany went through two completely opposite periods: From 1998 to 2007, income distribution was skewed drastically at the expense of employees and in favour of profits; Since 2008, income distribution has been skewed drastically in favour of employees and at the expense of profits. This reversal of the skewing of income distribution in Germany i s explained by the low productivity gains from 2011 and also by the acceleration in wages from 2007, as the return to full employment gave German employees significant bargaining power. In 2019, income distribution in Germany has returned to a negative situation for companies ; if interest payments on corporate debt had not fallen thanks to the fall in interest rates, German companies’ profit rate in 2019 would have returned to its 2000 level.