Does It Pay? Flexicurity and Pay in the Danish Flexicurity-Model

In studies of the Danish flexicurity-model the wage formation process is normally excluded. The model is described as a balanced model, where a trade-off between, on the one side, numerical flexibility &, one the other side, income security & employability balance the model. A different & supplementary interpretation of the model could be that internal & external flexibility, where wage earners move from one job to another inside the firm or to another firm, rewards the persons in question with a higher hourly wage. Here, income security in not related to unemployment insurance, but rather to an increase in the hourly wage. The relevant research question in this article is there for: When Danish wage earners are flexible, will they then receive a wage, which is higher or lower than the previous wage? Does it in fact pay to be flexible, & which kind of flexibility pays most, internal or external flexibility? Or does it pay to stay 'unchanged' in the same job in the same firm? The theoretical approach is based upon the theory of firm specific Human Capital & the theory of compensating wage differentials & the analysis show, that people "staying unchanged" or being internal flexible have a greater probability to receive a wage increase than people being external flexible, especially when they move to another sector. The probability to suffer a wage loss is conversely also greater, when people move outside to either another workplace in another trade or quite another sector. But -- all in all- the analysis also show, that most Danish wages earners are rewarded with positive wage gains, when they are showing flexibility. So the article support the concept of income security in the Danish flexicuritymodel, but from a different angel. Tables, References. Adapted from the source document.