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Flexicurity, wage dynamics and inequality over the life-cycle

Author

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  • Paul Bingley
  • Lorenzo Cappellari
  • Niels Westergård-Nielsen
Abstract
We investigate the relationship between life-cycle wages and flexicurity in Denmark. We separate permanent from transitory wages and characterise flexicurity using membership of unemployment insurance funds. We find that flexicurity is associated with lower wage growth heterogeneity over the life-cycle and greater wage instability, changing the nature of wage inequality from permanent to transitory. While we are in general unable to formally test for moral hazard against adverse selection into unemployment insurance membership, robustness checks suggest that moral hazard is the relevant interpretation.

Suggested Citation

  • Paul Bingley & Lorenzo Cappellari & Niels Westergård-Nielsen, 2012. "Flexicurity, wage dynamics and inequality over the life-cycle," Working Papers 2, Department of the Treasury, Ministry of the Economy and of Finance.
    • Handle: RePEc:itt:wpaper:wp2012-2
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    References listed on IDEAS

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    Cited by:

    1. Sharon Bolton & Knut Laaser & Darren Mcguire, 2016. "Quality Work and the Moral Economy of European Employment Policy," Journal of Common Market Studies, Wiley Blackwell, vol. 54(3), pages 583-598, May.
    2. Gabriele Ballarino & Francesco Bogliacino & Michela Braga & Massimiliano Bratti & Daniele Checchi & Antonio Filippin & Virginia Maestri & Elena Meschi & Francesco Scervini, 2012. "GINI Intermediate Report WP 3: Drivers of Growing Inequality," GINI Discussion Papers wp3, AIAS, Amsterdam Institute for Advanced Labour Studies.

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    More about this item

    Keywords

    Unemployment insurance; wage dynamics; wage inequality; wage instability;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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