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

  • Denisa Maria Sologon


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

  • O'Donoghue, Cathal

    (Teagasc, NUI, Ireland)

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

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Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 070.

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Date of creation: 2011
Date of revision:
Handle: RePEc:unm:unumer:2011070
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  1. Peter Gottschalk, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring.
  2. Peter T. Gottschalk & Enrico Spolaore, 2000. "On the Evaluation of Economic Mobility," JCPR Working Papers 185, Northwestern University/University of Chicago Joint Center for Poverty Research.
  3. Roland Bénabou & Efe A. Ok, 2000. "Mobility as Progressivity: Ranking Income Processes According to Equality of Opportunity," Working Papers 150, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
  4. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
  5. Sologon, Denisa Maria & O'Donoghue, Cathal, 2009. "Increased Opportunity to Move Up the Economic Ladder? Earnings Mobility in EU: 1994-2001," IZA Discussion Papers 4311, Institute for the Study of Labor (IZA).
  6. Hofer, Helmut & Weber, Andrea, 2002. "Wage mobility in Austria 1986-1996," Labour Economics, Elsevier, vol. 9(4), pages 563-577, September.
  7. Steven J. Haider, 2000. "Earnings Instability and Earnings Inequality of Males in the United States: 1967-1991," Working Papers 00-15, RAND Corporation Publications Department.
  8. SOLOGON Denisa & O?DONOGHUE Cathal, 2010. "Earnings dynamics and inequality in the EU, 1994-2001," LISER Working Paper Series 2010-34, LISER.
  9. Paul Gregg & Claudia Vittori, 2008. "Exploring Shorrocks Mobility Indices Using European Data," The Centre for Market and Public Organisation 08/206, Department of Economics, University of Bristol, UK.
  10. Greg J. Duncan & James N. Morgan, 1981. "Sense of Efficacy and Subsequent Change in Earnings-A Replication," Journal of Human Resources, University of Wisconsin Press, vol. 16(4), pages 649-657.
  11. Richard V. Burkhauser & John G. Poupore, 1997. "A Cross-National Comparison Of Permanent Inequality In The United States And Germany," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 10-17, February.
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