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Rising Wage Inequality in Germany

  • Gernandt, Johannes
  • Pfeiffer, Friedhelm

This paper investigates the evolution of wages and the recent tendency to rising wage inequality in Germany, based on the German Socio-Economic Panel (GSOEP) for 1984 to 2004. Between 1984 and 1994 the wage distribution was fairly stable. Wage inequality started to increase around 1994 in Germany for all workers and for prime age dependent male workers as well. Rising inequality is not the result of the recent rise in self-employment. In West Germany rising inequality occurred in the lower part of the wage distribution, in East Germany in the upper part of the wage distribution. While residual wage inequality accounted for two-thirds of rising wage inequality in West Germany, in East Germany price effects dominated. In West Germany the group of workers with low tenure experienced higher inequality.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-19.

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Date of creation: 2006
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Handle: RePEc:zbw:zewdip:4598
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  13. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
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  15. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
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  19. Franz, Wolfgang & Steiner, Viktor, 1999. "Wages in the East German transition process: facts and explanations," ZEW Discussion Papers 99-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  20. Ernst Fehr & Lorenz Goette, . "Robustness and Real Consequences of Nominal Wage Rigidity," IEW - Working Papers 044, Institute for Empirical Research in Economics - University of Zurich.
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  22. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  23. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," NBER Working Papers 11628, National Bureau of Economic Research, Inc.
  24. Meghir, Costas & Whitehouse, Edward, 1996. "The Evolution of Wages in the United Kingdom: Evidence from Micro Data," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 1-25, January.
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  26. Volker Ludwig & Friedhelm Pfeiffer, 2006. "Abschreibungsraten allgemeiner und beruflicher Ausbildungsinhalte - empirische Evidenz auf Basis subjektiver Einschätzungen," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(3), pages 260-284, May.
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  29. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
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