Explaining the evolution of income inequality in Germany from 1991-2010

Abstract: This thesis examines the evolution of income inequality in Germany from 1991-2010, by analyzing the literature on labour market theories. It is assumed that human capital, labour market segmentation and globalization are the main long-term determinants of income inequality. Most importantly, skill-biased technological change (SBTC) has increased the dispersion of incomes to the detriment of people at the lower end of the income distribution scale. Evidence suggests that the rise in market income inequality was the main driving force behind the widening income distribution since the early 1990s.