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Policy, Institutional Factors and Earnings Mobility


  • Sologon, Denisa Maria


  • O'Donoghue, Cathal

    () (Maastricht University)


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.

Suggested Citation

  • Sologon, Denisa Maria & O'Donoghue, Cathal, 2009. "Policy, Institutional Factors and Earnings Mobility," IZA Discussion Papers 4151, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4151

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    References listed on IDEAS

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    Cited by:

    1. SOLOGON Denisa & O'DONOGHUE Cathal, 2010. "Earnings dynamics and inequality in the EU, 1994-2001," LISER Working Paper Series 2010-34, LISER.
    2. Sologon, Denisa Maria & O'Donoghue, Cathal, 2010. "Earnings Dynamics and Inequality among Men in Luxembourg, 1988-2004: Evidence from Administrative Data," IZA Discussion Papers 5014, Institute for the Study of Labor (IZA).

    More about this item


    labour market institutions; mobility; inequality; wage distribution; panel data; labour market policies;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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, Vacancies, and Immigrant Workers - - - 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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