10.2 Gini coefficient of income after social transfers
The Gini coefficient is a measure of relative inequality and ranges between zero and one.
A value of zero indicates perfect equality, while a value of one represents maximum inequality. In terms of income distribution, a Gini coefficient of one would mean that all income is concentrated in the hands of a single individual. The lower the Gini coefficient, the more evenly income is distributed.
The indicator is based on what is known as equivalised income.
This refers to income adjusted for household needs, calculated on the basis of a household’s total income as well as the number and age of its members.
Using an equivalence scale, incomes are weighted according to household size and composition. This allows for meaningful comparisons of individuals from households of different sizes, since larger households benefit from economies of scale – such as shared housing or domestic appliances.
Equivalised disposable income is defined as a household’s total income (including social transfers) after taxes and other deductions. It represents the income available for consumption and saving. This is distinct from equivalised income before social transfers, which refers to income without state-provided transfers such as unemployment or housing benefits. Notably, pensions are not considered social transfers and are included in pre-transfer income.
The same applies to equivalised market income, which represents income before taxes and social contributions and without social transfers.
All types of income included in this context are treated equally, regardless of their source, whether wages, rental income, or capital gains.
Income data are derived from the EU-wide harmonised annual survey on income and living conditions (EU-SILC).
In Germany, this survey was integrated into the microcensus in 2020, accompanied by extensive methodological changes aimed at improving timeliness and enabling more detailed regional analysis.
As a result, data from 2020 onwards are not comparable with those from previous years.
To ensure international comparability, statistical adjustments are made to account for the underrepresentation of high-income and high-wealth households, which commonly occurs in voluntary sample surveys.
As in previous years, Germany’s Gini coefficient for equivalised disposable income in 2024 (0.295) was very close to the European Union (EU) average (0.293).
This indicates relatively small differences in income inequality between Germany and the EU overall.
Nevertheless, Germany’s Gini coefficient in 2024 was slightly higher than the EU average, meaning that the politically defined target was not achieved.
The Gini coefficient for equivalised disposable income was significantly lower than that for pre-transfer equivalised income (0.295 compared to 0.355).
As expected, the Gini coefficient for equivalised market income is consistently even higher – reaching 0.477 in 2024.
This illustrates that redistribution through social benefits, insurance systems and taxation plays a significant role in reducing income inequality in Germany.
When considering wealth inequality, the picture is different. According to the Household Finance and Consumption Survey (HFCS) – an irregularly conducted study by the European Central Bank (ECB) – wealth distribution in Germany is much more unequal.
In 2023, the corresponding Gini coefficient stood at 0.724, significantly higher than the figures for income inequality.
By comparison, the most recent available value for the euro area was 0.694 in 2021, thus below Germany’s level.
However, certain factors not reflected in the wealth Gini coefficient place this apparent inequality into perspective.
For instance, future pension and retirement entitlements are not included in the measurement of household wealth.
