Editor in chief at IamExpat Media
How much somebody earns in Germany depends very much on where in the country they live. A new study has revealed just how much incomes in Germany differ between different regions.
Broadly speaking, southern Germany is richer than northern Germany, while the west is richer than the east. A new study by the Economic and Social Science Institute (WSI) of the Hans-Böckler Foundation has found that regional differences in income are still significant in the federal republic.
Using the most recently-available data from 2019, the study found that people in some of Germany’s poorest regions have less than half the average disposable income of those living in the country’s richest areas.
For the purposes of the study, “disposable income” was defined as a person’s mean primary income - from both rentals and working - minus contributions to social security, income taxes, wealth taxes and other forms of direct taxation. It also takes into account social benefits and other standard expenses like car insurance and liability insurance.
Accordingly, Heilbronn - a German city in the southwestern state of Baden-Württemberg - topped the study with an average disposable income of 42.275 per resident. The town of Starnberg in Bavaria came second with 38.509. At the other end of the scale, residents of Gelsenkirchen and Duisburg in North Rhine-Westphalia have nearly half as much income available with 17.015 and 17.741 euros, respectively.
The absolute poorest regions may be in western Germany, but the study’s data shows that there is still a clear east-west divide between the federal states, with disposable incomes overall lower in eastern Germany. Indeed, only one district in the new (eastern) states achieved a disposable income per capita above the average for the whole country - and that was Potsdam-Mittelmark, with 24.127 euros.
The study also uncovered a clear north-south divide within the eastern and western states. For example, the average per capita income in Bavaria and Baden-Württemberg is around 2.600 euros higher than the rest of western Germany.
However, the researchers did note that, especially in some smaller towns or rural areas with few inhabitants, the statistics could in places be skewed by the presence of individuals with very high incomes. For instance, Heilbronn is home to Dieter Schwarz, the former CEO of Lidl and Kaufland.
The WSI added that their figures showed that differences in disposable income were clearly reduced by state redistribution via taxes and social benefits. “The analysis shows that the system of state taxes and transfers, which include child benefits, unemployment benefits or pensions, make a significant contribution to equalising incomes in Germany,” the report states.
In addition to state-driven redistribution of wealth, regional price differences further ensure that living conditions do not diverge dramatically from region to region, the study added. High-income regions generally also have higher rents and other prices. “People have more money in their pockets, but they won’t be able to afford more,” said WSI researcher Toralf Pusch.