Does Greater Labour Market Flexibility Induce Greater Levels of Inequality within Europe? |
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Authors: | Rune Gulev |
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Institution: | (1) Faculty of Management, University of Primorska, Koper, Slovenia |
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Abstract: | Economic and social inequality is often thought to be contingent on varying degrees of labour market flexibility. This paper
investigates this causal nexus and tests the correlation between flexibility and inequality for the European labour market
by using evidence from European labour market institutions and data from several sources of inequality measures. We find that,
on a pan-European level, there is overwhelming evidence that inequality levels do not fluctuate with varying degrees of labour
market flexibility. On a country-specific level, we find several labour market characteristics that promote flexibility and
equality. They include decentralized labour market institutions, low utilization of temporary work, and redundancy systems
that unite low employment protection with high economic and social protection. Taken together, these factors enable the European
labour market to buck the stylized perception that high labour market flexibility is coupled with high inequality. |
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Keywords: | labour market flexibility Europe social and economic inequality |
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