A NOTE ON LABOR-MARKET FLEXIBILITY

In this article two aspects of labour market flexibility are discussed . Firstly, the dispersion of wages and changes therein, and secondly, the regulation of employment security. It is pointed out that wage fle xibility per se is no indication of a well functioning labour market a nd that the views according to which permanent long-term jobs are beco ming increasingly scarce is not supported by the data. The negative ef fects of employment security have been strongly exaggerated in the rec ent discussion. However, a closer examination of how the current rules affect the employment opportunities of small or new firms is warrante d.