Wage mobility in Europe. A comparative analysis using restricted multinomial logit regression

The paper investigates cross-country differences in wage mobility in\nEurope using the European Community Household Panel. We examine the\nimpact of specific wage-setting institutions, such as the collective\nbargaining and the trade union density, the employment protection\nregulation and the welfare state regime on wage mobility. We apply a\nlog-linear approach that is very much similar to a restricted\nmultinomial logit model and much more flexible than the standard probit\napproach that is typically applied in the research on wage mobility. It\nis shown that the macro-economic context and the aforementioned specific\ninstitutions explain a substantial part of the cross-country variation\nthat is larger than the part that regime type explains. The findings\nalso confirm the existence of an inverse U-shape pattern of wage\nmobility, showing a great deal of low-wage and high-wage persistence in\nall countries.