This paper uses ECHP and OECD data for 14 EU countries to explore the role of labour market factors in explaining cross-national differences in the dynamic structure of earnings: in permanent inequality, transitory inequality and earnings mobility. Based on ECHP, minimum distance estimator is used to decompose earnings inequality into the permanent and transitory components and compute earnings mobility. The predicted components together with the institutional OECD data are used in a non-linear least squares setting to estimate the relationship between permanent inequality, transitory inequality and earnings mobility, and labour market policy and institutional factors. The results revealed a highly complex framework, where institutions interact significantly not only with each other and with the overall institutional setting, but also with the macroeconomic shocks in shaping the pattern of the three labour market outcomes.
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers with number
183.
Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
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