How has the gender wage gap in Germany developed since the 1990s, and what factors can explain the gap? : A look at gender wage differentials in Germany across time

Germany has a rich history being a conservative welfare state with a strong male breadwinner model. Yet, numerous changes have been made to its welfare structure since the reunification of both sides in 1990. One would then expect to see wage inequality decrease in the country during this period and in fact, it has. Having used data for the country as a whole during this period, along with two econometric approaches: OLS estimates and Oaxaca decomposition, I have been able to demonstrate that the gender wage gap in Germany has narrowed since the 1990s. Factors such as ‘years of work experience’, ‘weeks worked’ and ‘relation to household head’ are the most influential ones that have affected the gender wage gap from 1990 to 2016. In addition, it has also been observed that women have accrued less human capital compared to men during this period, which could have increased the gender wage gap. Further, discrimination experienced by women as well as other unobservable differences has significantly decreased during this period, which could point to a large decrease in the gender wage gap. With the aid of an interaction term, it has been possible to remove the increasing amount of irrelevant effects that have emerged in both of the aforementioned terms over time, thus providing us with more accurate results