The European Journal of Comparative Economics

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EJCE Year: 2011, December. Volume: 8 - Issue: 2

Shaping Earnings Mobility: Policy and Institutional Factors

by Denisa Maria Sologon ; Cathal O'Donoghue

Start page: 175 - End page: 202

Keywords: Wage Distribution; Inequality; Earnings Mobility; Labour Market Institutions; Labour Market Policies

Jel code: C23; D31; J08; J31; J50; J60

DOI:

Abstract:

This paper explores the role of labour market policy and institutional factors in explaining cross-national differences in earnings mobility across Europe in the 1990s using the European Community Household Panel and OECD data on institutional variables. More regulation in both labour and product markets emerge as sources of labour market rigidity, being positively associated with earnings immobility and exacerbating the adverse effects of macro-economic shocks on earnings mobility. Unionization is found to promote earnings mobility, effect, however, counteracted in periods with adverse macroeconomic shocks. Corporatism is found to promote mobility and to counteract the adverse effects of macroeconomic shocks on earnings mobility. The generosity of the unemployment benefit is found to limit the adverse effects of macroeconomic shocks on earnings mobility.

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