Wage and labor mobility in Denmark, 1980-2000

This new working paper from nber looks interesting, especially for the non-Danish readers of this blog who don’t know much, if anything, about the Danish labour market.

I have not been able to find a free online version of it, but I would assume that it is not fundamentally different from the 2004-version of the same (?) paper, which is available here.

The concluding remarks to the 2004 paper:

[…] the institutional setup of the Danish labor markets differs from that found in most other European countries, but also from that in the neighboring Nordic countries, in that it has removed a number of barriers to mobility. This is in a sense only natural because for a long time, almost a century, Danish wage setting has been highly centralized and furthermore characterized a very compressed wage structure, leaving only limited scope for employers to adjust to changed labor market conditions via wages. Worker mobility is indeed high. We show
that despite high turnover rates, a considerable portion of workers are in long-term employment relationships. However, the share of long-term jobs is found to be lower than in the United States.

Second, the ongoing process towards increasingly decentralized wage bargaining and wage setting, starting in the second half of the eighties, has given rise to an increase, albeit of relatively modest magnitude, in the dispersion of wages. The widening wage distribution seems to be mainly due to increasing wage differentials between firms, not within. In parallel, the level and between-firm variance in returns to human capital have increased. The shift to decentralized wage bargaining has coincided with deregulation and increased product market competition. The evidence appears not to be consisten with increased product market competition eroding firm-specific rents, however.

The bold part of the quote above are exactly the same words as those used in the abstract to the new 2007 paper, which is one of the reasons I doubt there’s much new revolutionary stuff to be found here compared to the older paper.

Table 4, which illustrate that the estimated returns to education (the authors call it “skill”, which I find somewhat problematic) has almost doubled during the period, is perhaps worth a blog post of its own.


April 27, 2007 - Posted by | denmark, Economics, Studies

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