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Unions, Internationalization, Tasks, Firms, and Worker Characteristics: A Detailed Decomposition Analysis of Rising Wage Inequality in Germany

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  • Martin Biewen

    (University of Tübingen)

  • Matthias Seckler

    (University of Tübingen)

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.

Suggested Citation

  • Martin Biewen & Matthias Seckler, 2019. "Unions, Internationalization, Tasks, Firms, and Worker Characteristics: A Detailed Decomposition Analysis of Rising Wage Inequality in Germany," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(4), pages 461-498, December.
    • Handle: RePEc:spr:joecin:v:17:y:2019:i:4:d:10.1007_s10888-019-09422-w
    DOI: 10.1007/s10888-019-09422-w
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    3. Charlotte Bartels & Carsten Schröder, 2020. "Die Bedeutung von Mieteinkommen und Immobilien für die Ungleichheit in Deutschland," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(10), pages 741-746, October.
    4. Martin Biewen & Miriam Sturm, 2021. "Why a Labour Market Boom Does Not Necessarily Bring Down Inequality: Putting Together Germany’s Inequality Puzzle," SOEPpapers on Multidisciplinary Panel Data Research 1139, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Francesco Bloise & Irene Brunetti & Valeria Cirillo, 2022. "Firm strategies and distributional dynamics: labour share in Italian medium-large firms," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(2), pages 623-655, July.
    6. José L. Groizard & Xisco Oliver & María Sard, 2022. "An account of the exporter wage gap: Wage structure and composition effects across the wage distribution," The World Economy, Wiley Blackwell, vol. 45(5), pages 1528-1563, May.
    7. Nicola Gagliardi & Benoît Mahy & François Rycx, 2020. "Trade, GVCs, and wage inequality: Theoretical and empirical insights," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 115-134.
    8. Manuel Carlos Nogueira & Mara Madaleno, 2023. "Skill-Biased Technological Change and Gender Inequality across OECD Countries—A Simultaneous Approach," Economies, MDPI, vol. 11(4), pages 1-18, April.
    9. Markus M. Grabka, 2021. "Ungleichheit der Haushaltsnettoeinkommen — Trends, Treiber, Politikmaßnahmen," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(7), pages 508-515, July.
    10. Daniel Baumgarten & Gabriel Felbermayr & Sybille Lehwald, 2020. "Dissecting Between‐Plant and Within‐Plant Wage Dispersion: Evidence from Germany," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 85-122, January.
    11. Barbieri, Teresa, 2021. "Changes in the Italian wage distribution: the role of routine and social tasks," MPRA Paper 113407, University Library of Munich, Germany.
    12. Matthias Seckler, 2022. "Increasing Inequality in Long‐Term Earnings: A Tale of Educational Upgrading and Changing Employment Patterns," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(3), pages 617-652, September.
    13. Bernd Fitzenberger & Arnim Seidlitz, 2020. "The 2011 break in the part-time indicator and the evolution of wage inequality in Germany," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-14, December.
    14. Biewen, Martin & Fitzenberger, Bernd & Rümmele, Marian, 2022. "Using Distribution Regression Difference-in-Differences to Evaluate the Effects of a Minimum Wage Introduction on the Distribution of Hourly Wages and Hours Worked," IZA Discussion Papers 15534, Institute of Labor Economics (IZA).
    15. Franziska Brall & Ramona Schmid, 2023. "Automation, robots and wage inequality in Germany: A decomposition analysis," LABOUR, CEIS, vol. 37(1), pages 33-95, March.
    16. Charlotte Bartels & Carsten Schroeder, 2020. "The role of rental income, real estate and rents for inequality in Germany," Working Papers 7, Forum New Economy.
    17. Glitz, Albrecht & Wissmann, Daniel, 2021. "Skill Premiums and the Supply of Young Workers in Germany," Labour Economics, Elsevier, vol. 72(C).
    18. Brall, Franziska & Schmid, Ramona, 2020. "Automation, robots and wage inequality in Germany: A decomposition analysis," Hohenheim Discussion Papers in Business, Economics and Social Sciences 14-2020, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    19. Elin Svarstad & Ragnar Nymoen, 2023. "Wage inequality and union membership at the establishment level: An econometric study using Norwegian data," Oxford Economic Papers, Oxford University Press, vol. 75(2), pages 371-392.
    20. Fana Marta & Giangregorio Luca, 2021. "Routine-biased technical change can fail: Evidence from France," JRC Working Papers on Labour, Education and Technology 2021-14, Joint Research Centre.
    21. Benedikt Schröpf, 2023. "The dynamics of wage dispersion between firms: the role of firm entry and exit," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-29, December.
    22. Martin Biewen & Miriam Sturm, 2022. "Why a labour market boom does not necessarily bring down inequality: putting together Germany's inequality puzzle," Fiscal Studies, John Wiley & Sons, vol. 43(2), pages 121-149, June.
    23. Ramona Schmid, 2023. "Migration and wage inequality: a detailed analysis for German metropolitan and non-metropolitan regions [Migration und Lohnungleichheit: Eine detaillierte Analyse für Deutsche Metropol- und Nicht-M," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(1), pages 147-201, April.

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