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The dissertation collects four self-contained essays which contribute to the literature on wage structures, heterogeneous labor demand, and the impact of trade unions. The first paper provides a detailed description of the evolution of wage inequality in East and West Germany in the late years of the twentieth century. In contrast to previous decades, wage inequality has been rising in several dimensions during that period. The second paper identifies cohort effects in the evolution of both wages and employment. Observed structures are consistent with a labor demand framework that incorporates steady skill-biased technical change. Substitutability between skill and age groups in the German labor market is found to be relatively high. Simulations based on estimated elasticities of substitution illustrate that higher wage dispersion between skill groups would have contributed to a reduction in unemployment. The third paper estimates determinants of individual union membership decisions and studies the erosion of union density in East and West Germany. Using corresponding predictions of net union density, the fourth paper analyzes the link between union strength and the structure of wages. A higher union density is associated with lower residual wage dispersion, reduced skill wage differentials, and a lower wage level. This finding is in line with an insurance motive for union action. The thesis comprises the following articles: (1) “Rising Wage Dispersion, After All! The German Wage Structure at the Turn of the Century,” IZA Discussion Paper 2098, April 2006. (2) “Skill Wage Premia, Employment, and Cohort Effects: Are Workers in Germany All of the Same Type?”, IZA Discussion Paper 2185, June 2006, joint with Bernd Fitzenberger. (3) “The Erosion of Union Membership in Germany: Determinants, Densities, Decompositions,” IZA Discussion Paper 2193, July 2006, joint with Bernd Fitzenberger and Qingwei Wang. (4) “Equal Pay for Equal Work? On Union Power and the Structure of Wages in West Germany, 1985–1997,” translation of “Gleicher Lohn für gleiche Arbeit? Zum Zusammenhang zwischen Gewerkschaftsmitgliedschaft und Lohnstruktur in Westdeutschland 1985–1997,” Zeitschrift für Arbeitsmarkt-Forschung, 38 (2/3), 125-146, joint with Bernd Fitzenberger, 2005.