Flexicurity Institutions and Labour Market Mobility

Advocates of flexicurity claim that flexibility and security in the labour market can be achieved by a combination of certain institutions: liberal Employment Protection Legislation (EPL), generous income protection, extensive Active Labour Market Policies (ALMPs), and good opportunities for Lifelong Learning (LLL). Such a mix of measures is assumed to lead to an efficiently functioning labour market, implying a win-win situation for both employers and employees. This article examines the relationship between flexicurity institutions and some forms of labour market mobility between employment and unemployment and between employment and inactivity in four Nordic countries, Denmark, Finland, Norway, and Sweden, in the period 2000-2006. With the most liberal EPL and generous measures for people without jobs, Denmark is closest to the flexicurity ideal. Controlling for various other factors, it turns out that the Danish labour market generally - but not in every respect - has the highest levels of mobility. Perhaps the most interesting exception is that the highly significant transition rate from unemployment to employment is higher in Norway. The explanatory value of flexicurity is, thus, limited and the assumptions regarding the effects of mutually reinforcing flexicurity institutions are called into question.