German Economic Institute Reveals Stark Regional Disparities in Purchasing Power

A new study by the German Economic Institute (IW) Cologne finds that Heilbronn in Baden-Württemberg leads all 400 German districts and urban districts in real purchasing power, with a per capita real income of , while Gelsenkirchen in North Rhine-Westphalia records the lowest at . The study, released on April 12, 2026, calculates a so-called real income for every district and city by adjusting nominal per capita income for regional price differences. The data draws primarily on 2023 figures, with some income data from 2021, as the authors note that no more recent valid figures are available. Housing costs emerge as the single most important driver of price differences between regions. Bavaria ranks first among all federal states with a real income of 30,396 euros, while Berlin ranks last at 24,656 euros.

Regional purchasing power comparisons in Germany have long highlighted the divide between prosperous southern states and structurally weaker regions in the north and east. The IW Cologne has conducted earlier evaluations on the same topic, though the institute notes that the current study is only comparable to a limited extent with those previous analyses due to methodological differences. The study covers all 400 districts and urban districts across Germany's 16 federal states, linking regional price data with income figures from the Federal Statistical Office.

„Our study shows: It depends not only on the amount in the account but also on how expensive it is to live locally.” — Christoph Schröder via Süddeutsche Zeitung

The top ten districts nationwide consist exclusively of western German regions. Alongside Heilbronn, five Bavarian districts, two from Rhineland-Palatinate, and one each from Hesse and North Rhine-Westphalia make up the national top ten. In Rhineland-Palatinate, the Neuwied district ranks fourth nationally, with local living costs around four percent below the national average and comparatively high disposable income per capita. The Mainz-Bingen district follows in ninth place nationally, despite a cost of living slightly above average. In Hesse, the Hochtaunuskreis ranks eighth or tenth nationally depending on the source, with a regional purchasing power of 30,303 euros per inhabitant, driven by disposable incomes that rank fifth nationally despite local prices running around seven percent above average. Frankfurt am Main, by contrast, sits at rank 89 out of 400, as its nominal income of 29,036 euros is substantially offset by a price level 11.4 percent above the national average.

East German districts lag, but rural areas outperform cities Across eastern German states, a consistent pattern emerges: rural districts outperform urban centers in real purchasing power, largely because cities carry higher price levels. In Saxony, the Leipzig district leads the state with 30,030 euros per capita and ranks 121st nationally, while the city of Leipzig records only 24,466 euros and sits at rank 386 out of 400. Saxony as a whole places ninth among federal states with a real income of 27,592 euros, combining the fourth-lowest nominal income with the third-lowest prices nationally. In Thuringia, the district of Greiz tops the state at 25,056 euros, benefiting from living costs 8.1 percent below the national average, while Jena records the state's lowest purchasing power at 21,959 euros — the most expensive place to live in Thuringia, with costs 1.2 percent above the national average. Brandenburg residents have approximately 27,000 euros available per year after price adjustment, placing the state twelfth among all federal states, despite prices running around 2.3 percent below the national average — a discount that fails to compensate for low nominal wages. In Saxony-Anhalt, Halle records a real income of 24,184 euros per capita, ranking among the ten lowest values nationally, while Magdeburg fares somewhat better at 26,058 euros.

Housing costs drive the gap between districts and city centers The study consistently identifies housing as the primary factor separating high- and low-purchasing-power regions, a finding that explains why suburban and rural districts frequently outrank nearby urban centers. In Hesse, the city of Offenbach ranks 380th out of 400 nationally with 21,738 euros, despite being located within the prosperous Rhine-Main metropolitan area. Frankfurt's price level of 11.4 percent above the national average places it third most expensive nationally, behind only Munich and the Munich district. In Rhineland-Palatinate, Mainz carries the state's highest cost of living at eight percent above average, pushing it toward the lower end of the state ranking despite relatively solid nominal incomes. In Saarland, the district of St. Wendel leads the state thanks to living costs more than five percent below average, while the district of Merzig-Wadern finishes last in the state and ranks among the 20 districts with the lowest purchasing power nationwide. The IW Cologne notes that the data is only comparable to a limited extent with earlier evaluations on the same topic, and that the figures reflect structural conditions as of 2023 rather than the most current economic situation.