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Income inequality and top incomes: some recent empirical developments with a focus on Germany

During the few last years, several studies have revealed that income differences have increased in a number of OECD countries. While most of the corresponding empirical analyses have focused on general trends and poverty in the past, this paper emphasizes the highest income groups. A strong increase in top income shares has recently been well documented for several English-speaking countries, especially for the United States. The present paper is mainly concerned with the developments in Germany in the past years. Using a mixture of different data, the evolution of gross and net income differences is analysed and compared with the developments in other countries. It is shown that top incomes and top income shares in Germany have increased in the recent past. Finally, some possible explanations for these developments are discussed.