Market or closure: Which factors drive the increase of income inequality?

This article examines which factors contribute towards the increase in the income inequality that can be observed in Germany since the 1990's. While economists believe that the qualification of employees is becoming more and more important for the generation of income inequality, sociologists conceive social closure, implemented in institutional structures, class conflicts and mechanisms of discrimination, as responsible for rising inequality. Analyses of "Gehalts- und Lohnstrukturerhebung"-data show that closure mechanisms are especially important in West Germany, while qualification-related factors enhance inequality in East Germany.