Inequality in Germany: Theories & Graphs


  • Individual Labour Productivity Theory:
    • Wage gaps could be due to migrants respective productivities, which is related to human capital endowments.
    • Low human capital among immigrants may result from a lower level of education, but non-transferable human capital attained abroad could be a reason for their disadvantages in the labor market.
  • Overcrowding Theory:
    • Meaning that the excess supply of labour in occupations that are predominantly chosen by or assign to a specific immigrant group could be the cause of lower wages.
  • Monopsony Theory:
  • In this case, labour discrimination would arise because immigrants would be considered less elastic than natives at the firm level.