The German middle class in the context of the labour market

Background and objectives

The inequality of household incomes has increased in Germany. Since the late 1990s, the middle class has shrunk by five percentage points, while the lower and upper classes have gained in significance.

Studies on the middle class have so far been based on an analysis of secondary income distribution (disposable household income). The relationship between disposable household income and changes in the labour market has not yet been addressed. Our own analyses have shown that members of the lower class are mostly employed in jobs with low hourly wages and only a small amount of working time. In the upper income classes, however, hourly wages and annual and weekly working hours are much greater. Members of the lower class want to extend their working hours, but often have no opportunity to do so because they are often only offered mini-jobs.

The project focuses on the analysis of the relationship between changes in the labour market, such as the expansion of low wages and mini-jobs, and the development of household income stratification. The aim is to identify drivers for the increase in inequality of household incomes in the labour market.

Approach

This project continues and deepens our previous research on the low-wage sector and minimum wages as well as on the middle class in Germany.

The following topics will be investigated:

• Effects of the growing inequality in individual wages on the stratification structure of the population.
• Impact of the general statutory minimum wage on the low-wage sector and the wage distribution. Differentiation of the analysis according to sectors and groups of employees. Interactions between collectively agreed wages and minimum wages.
• Individual employment behaviour and class affiliation. How are individual employment characteristics such as working hours or hourly wages combined into income in the household context? How does employment behaviour and the stratification structure of the population change over time?
• Differentiation of households according to employment patterns (multiple earners, secondary earners, single breadwinner, etc.).
• Differentiated evaluation of weekly working hours and desired working hours in the different income classes. How far apart are wish and reality?
• Is there a polarization of the annual working times between the income classes?
• Influence of state redistribution on the stratification structure
• Income inequality and economic growth

The project is based on a mix of different methods: theoretical analyses and literature evaluations are combined with own statistical evaluations. Own evaluations are based on the Socio-Economic Panel (SOEP) of the DIW in the form of descriptive evaluations and regression analyses.