Abstract
This paper provides a comprehensive quantitative assessment of the importance of the factors associated with the rise in male wage inequality in Europe’s largest economy over the period 1995-2010. We simultaneously consider an extensive set of explanatory factors including personal characteristics, measures of internationalization, task composition, union coverage, industry, region, and firm characteristics. Our study uses a different data source than most of the other prominent studies on wage inequality in Germany. We carefully assess differences implied by the different data and show that previous studies have most likely underestimated the dominating role of de-unionization for the rise in German wage inequality. As the second most important factor, we identify compositional effects of personal characteristics such as age and education. We find only moderate effects linked to internationalization, firm heterogeneity, task changes and regional convergence.
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