Flexicurity, wage dynamics and inequality over the life-cycle

Paul Bingley, Lorenzo Cappellari and Niels Westergård-Nielsen ()

No 2, Working Papers from Department of the Treasury, Ministry of the Economy and of Finance

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.

Keywords: Unemployment insurance; wage dynamics; wage inequality; wage instability (search for similar items in EconPapers)
JEL-codes: J31 J65 (search for similar items in EconPapers)
Pages: 41
Date: 2012-03
New Economics Papers: this item is included in nep-ias, nep-lab and nep-lma
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Flexicurity, Wage Dynamics and Inequality over the Life-Cycle (2011)
Working Paper: Flexicurity, wage dynamics and inequality over the life-cycle (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:itt:wpaper:wp2012-2

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