PRIVATE NET WORTH IN EASTERN AND WESTERN GERmANy ONLy cONVERGING SLOWLy

25 DIW Economic Bulletin 11.2014 Aside from current income, the parameter of net worth represents a key resource in the economic activity of households. In addition, net worth has a specific function going far beyond the sheer fact of earning (for example, in the form of interest and dividends). It contributes significantly to stabilizing consumption in periods of income loss, while tangible assets can, as in the case of real estate, be used by the owner. A greater net worth may confer economic and political power, and be employed to achieve or maintain an individual’s own high social status, or support the development of his or her children. In this way, personal assets also serve to reproduce and form elites. Finally, accumulating private wealth is an important instrument for old-age security and intergenerational transfers in the form of inheritance or gifts.1