The distribution of income of self-employed, entrepreneurs and professions as revealed from micro income tax statistics in Germany

As simple as they may be, results describing the world are heavily dependent on the quality of the underlying data. One of the crucial variables in micro-analyses of well-being and human resources is income. This variable becomes even more crucial when the subject of analysis is the situation of the self-employed.

This paper focuses on the distribution of income based on very sound data: the German Income Tax Statistics (Einkommensteuerstatistik) 1992. Tbis was the first actual opportunity to use such asound micro-database to analyse the selfemployed in particular: a 100,000 micro-data sampie of the German Income Tax Statistics for the entire population. New is the comparison between income from dependent and self-employed work with an emphasis on entrepreneurs and professions; also new is the in-depth decomposition of inequality by the employment status (employee, entrepreneur, profession) and by single professions based on a generalised entropy decomposition approach.

One overall striking result is that the occupational status as an employee, entrepreneur or a professional and its relationship to the share of inequality is hardly the most important factor wh ich explains the overall income distribution and inequality pieture of reunified Germany; rather, it is within-group inequality which has the primary influence.