How much does your wage depend on what you learned, for whom you work, or what
job you do? Using largely unexplored administrative data from Germany allows us
to relate 80% of wage variation to observable characteristics of jobs, firms, and workers.
One wage determinant stands out: the hierarchy level of a job, summarizing
its responsibility, complexity, and required independence. This variable is typically
absent in other data sources. Climbing the hierarchy ladder explains almost all of
the rise in wage dispersion and half of the wage growth by age. It also is key to
explaining gender wage differences.