Wage inequality in West Germany increased between 2001 and 2006 due to higher wages at the top and lower wages below the median. Collective bargaining coverage dropped significantly for both men and women. Despite these changes, the gender wage gap stayed mostly the same, with some improvements for women at the top and bottom of the wage scale. Factors like workplace effects and personal characteristics played a big role in the rise of wage inequality. Firm differences within and between industries were the main drivers. Labor demand and firm wage policies also contributed to the gender wage gap.