Inequality of Opportunity in Wealth: Levels, Trends and Drivers in Germany

ABSTRACT This paper studies inequality of opportunity (IOp) in individual net wealth in Germany from 2002 to 2019 using the Socio‐Economic Panel (SOEP). Applying the ex‐ante IOp framework, we quantify the share of wealth inequality attributable to immutable circumstances and benchmark it against IOp in gross labour earnings. Relative IOp in net wealth is high—slightly above one half of total wealth inequality—and stable over time, whereas relative IOp in labour earnings declines and converges towards the wealth level by the end of the study period. Decomposing net wealth into financial, real estate and business components shows similar and stable IOp levels for financial and housing wealth, but substantially higher and more variable IOp for business wealth. Across all components, childhood and parental circumstances are the dominant drivers of wealth IOp, while place effects matter most for real estate wealth and gender for business wealth. In contrast, gender and demographics are the main contributors to IOp in labour earnings.