A Game of Snakes and Ladders: four applied micro-econometric studies of wages and jobs in the Netherlands

The thesis shows that wage-tenure profiles (‘wage-ladders’) in the Netherlands are relatively steep, compared internationally. Moreover, it suggests that low job-to-job mobility of older workers and steep wage-tenure profiles are two sides of the same coin. Steep wage-tenure profiles are partly explained by relatively high wage rises of wages exceeding the highest wage-scale ceilings. A difference-in difference analysis on matched data shows that the consequences of displacement due to firm bankruptcy (of encountering a ‘snake’) are highly contingent on age, especially in terms of employment probabilities. Job- and sector-specific factors are important to understanding steep wage-tenure profiles and the fact that displacement affects older workers more negatively than prime-age workers. A decomposition on linked employer--employee panel data shows that employment reduction is by far the most important channel for wage-bill contraction when firms face declining sales. Regressions indicate that if wages were more downwardly flexible, job losses could be lower after adverse shocks. Moreover, employment adjustments do not hit a random group of workers. This illustrates a segmented labour market, where employment adjustment on the one hand predominantly affects workers with relatively weak labour-market positions, while ongoing workers are assured of wage increases notwithstanding any sales shocks suffered by the firm.

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