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Earnings Mobility in Europe: 1994-2001 : Do more flexible labour markets experience a higher earnings mobility?

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  • Denisa Maria Sologon

    (UNU-MERIT/MGSoG, Maastricht University, CEPS/INSTEAD Luxemburg, and IZA Germany)

  • O'Donoghue, Cathal

    (Teagasc, NUI, Ireland)

Abstract

The economic reality of the 1990s in Europe forced the labour markets to become more flexible. Using a consistent comparative dataset for 14 European countries, the European Community Household Panel (ECHP), we explore the evolution and the cross-national differences in earnings mobility across Europe between 1994 and 2001 from three angles: first, the evolution of short-term inequality and its link with cross-sectional inequality; second, the evolution of long-term mobility relative to short-term mobility and the implications for long-term inequality; third, we try to understand the cross-national differences in earnings mobility across Europe by exploring the cross-country heterogeneity in labour market policies/institutions. We explore the rank mobility and mobility as an equalizer of longer-term earnings. We find evidence supporting a negative association between the evolution of earnings inequality and earnings mobility. More flexible labour markets, with low levels of regulation and with a high labour market support are found to have higher earnings mobility. Similarly, unionization and corporatism are positively associated with earnings mobility. The "Flexicurity" countries (Denmark and Finland) have among the highest earnings mobility levels in Europe, close to the Anglo-Saxon countries (Ireland and the UK), whereas the Mediterranean countries with a strict regulation and a low labour market support have the lowest mobility. Portugal is the only country with disequalizing mobility in a long-term perspective

Suggested Citation

  • Denisa Maria Sologon & O'Donoghue, Cathal, 2011. "Earnings Mobility in Europe: 1994-2001 : Do more flexible labour markets experience a higher earnings mobility?," MERIT Working Papers 2011-070, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2011070
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    References listed on IDEAS

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    More about this item

    Keywords

    earnings mobility; inequality; distributional change; labour market policies and institutions;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D39 - Microeconomics - - Distribution - - - Other
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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