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The ins and outs of unemployment in a two-tier labor market

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  • Silva, José I.
  • Vázquez-Grenno, Javier

Abstract

This paper aims to shed some light on the dynamics of the Spanish labor market, using data from the Spanish Labor Force Survey for the period 1987 to 2010. We examine transition rates in a three-state model and compare our results with those reported for the UK and the US. Explicitly, introducing the employment duality present in the Spanish labor market, we study labor market dynamics in a four-state model set-up and we compute the contribution of the different transitions rates to unemployment fluctuations. Our main findings are as follows: i) around 85% the employment–unemployment gross flows involve temporary contracts; ii) the transition rates involving temporary employment account for around 60% of the fluctuations in the unemployment rate; iii) almost 80% of the unemployment rate volatility – explained by movements between unemployment and employment – involves the transition rates to/from temporary jobs. Our overall conclusion points out that the employment duality is the key to understanding the unemployment volatility and the functioning of the Spanish labor market.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 24 (2013)
Issue (Month): C ()
Pages: 161-169

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Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:161-169

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Web page: http://www.elsevier.com/locate/labeco

Related research

Keywords: Job finding rate; Job separation rate; Unemployment;

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References

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  16. den Haan, Wouter J., 2000. "The comovement between output and prices," Journal of Monetary Economics, Elsevier, vol. 46(1), pages 3-30, August.
  17. Samuel Bentolila & Juan Jose Dolado & Juan F. Jimeno, 2008. "Two-tier Employment Protection Reforms: The Spanish Experience," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 6(4), pages 49-56, December.
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