Advanced Search
MyIDEAS: Login to save this article or follow this journal

Flexibility at the margin and labour market volatility: The case of Spain

Contents:

Author Info

  • Héctor Sala

    (Universitat Autònoma de Barcelona)

  • José I. Silva

    (Universitat Jaume I de Castelló)

Abstract

The Spanish labour market is a prominent case of segmentation with flexibility at the margin (e.g., just a􀀞ecting fixed-term employees). Flexibility at the margin produces a gap in separation costs between temporary and permanent workers which causes fixed-term contracts to be the main workforce adjustment device. It also leads to a productivity gap, due to high turnover and lack of on-the-job training of temporary employees. To explain the high volatility of the Spanish labour market we develop a matching model with temporary and permanent employees where these gaps play a central role. This model is calibrated and simulated to match the stylised facts and assess the cyclical implications of the 1984 and 1997 labour market reforms.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://ftp.fundacionsepi.es/InvEcon/paperArchive/May2009/v33i2a1.pdf
File Function: Full text
Download Restriction: no

Bibliographic Info

Article provided by Fundación SEPI in its journal Investigaciones Económicas.

Volume (Year): 33 (2009)
Issue (Month): 2 (May)
Pages: 145-178

as in new window
Handle: RePEc:iec:inveco:v:33:y:2009:i:2:p:145-178

Contact details of provider:
Postal: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain
Email:
Web page: http://www.fundacionsepi.es/

Order Information:
Email:
Web: http://www.fundacionsepi.es/revistas/presentacion.asp

Related research

Keywords: flexibility at the margin; labour market volatility; firing costs; labour productivity; matching.;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. César Alonso-Borrego & Jesús Fernández-Villaverde & José E. Galdón-Sánchez, 2004. "Evaluating Labor Market Reforms: A General Equilibrium Approach," PIER Working Paper Archive 04-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  2. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Juan Botero, 2003. "The Regulation of Labor," NBER Working Papers 9756, National Bureau of Economic Research, Inc.
  3. Hector Sala & Jose I. Silva & Manuel E. Toledo, 2007. "Flexibility at the margin and labor market volatility in OECD countries," Economics Working Papers we075832, Universidad Carlos III, Departamento de Economía.
  4. Lorraine Dearden & Howard Reed & John Van Reenen, 2005. "The Impact of Training on Productivity and Wages: Evidence from British Panel Data," CEP Discussion Papers dp0674, Centre for Economic Performance, LSE.
  5. John T. Addison & Mário Centeno & Pedro Portugal, 2004. "Key Elasticities in Job Search Theory: International Evidence," Working Papers w200412, Banco de Portugal, Economics and Research Department.
  6. Costain, James S. & Reiter, Michael, 2008. "Business cycles, unemployment insurance, and the calibration of matching models," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1120-1155, April.
  7. Juan F. Jimeno & Luis Toharia, 1993. "The effects of fixed-term employment on wages: theory and evidence from Spain," Investigaciones Economicas, Fundación SEPI, vol. 17(3), pages 475-494, September.
  8. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June.
  9. Pietro Garibaldi & Giovanni L. Violante, 2005. "The Employment Effects of Severance Payments with Wage Rigidities," Economic Journal, Royal Economic Society, vol. 115(506), pages 799-832, October.
  10. Garey Ramey & Wouter J. den Haan & Joel Watson, 2000. "Job Destruction and Propagation of Shocks," American Economic Review, American Economic Association, vol. 90(3), pages 482-498, June.
  11. Silva, José I. & Toledo, Manuel, 2008. "Separation costs, job heterogeneity and labor market volatility in the matching model," Economics Letters, Elsevier, vol. 101(1), pages 77-79, October.
  12. Messina, Julián & Vallanti, Giovanna, 2006. "Job flow dynamics and firing restrictions: evidence from Europe," Working Paper Series 0602, European Central Bank.
  13. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  14. Güell, Maia & Petrongolo, Barbara, 2003. "How Binding Are Legal Limits? Transitions from Temporary to Permanent Work in Spain," IZA Discussion Papers 782, Institute for the Study of Labor (IZA).
  15. Christopher Pissarides, 2007. "The unemployment volatility puzzle: is wage stickiness the answer?," LSE Research Online Documents on Economics 4460, London School of Economics and Political Science, LSE Library.
  16. Adriana Kugler & Juan F. Jimeno & Virginia Hernanz, 2002. "Employment consequences of restrictive permanent contracts: Evidence from Spanish labor market reforms," Economics Working Papers 651, Department of Economics and Business, Universitat Pompeu Fabra.
  17. Cabrales, Antonio & Hopenhayn, Hugo A., 1997. "Labor-market flexibility and aggregate employment volatility," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 189-228, June.
  18. Raquel Fonseca & Rafael Muñoz, 2003. "Can the matching model account for Spanish unemployment?," Investigaciones Economicas, Fundación SEPI, vol. 27(2), pages 277-308, May.
  19. Dale Mortensen & Eva Nagypal, 2007. "More on Unemployment and Vacancy Fluctuations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 327-347, July.
  20. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  21. Victor Aguirregabiria & Cesar Alonso-Borrego, 2009. "Labor Contracts and Flexibility: Evidence from a Labor Market Reform in Spain," Working Papers tecipa-346, University of Toronto, Department of Economics.
  22. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
  23. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2005. "Unemployment and vacancy fluctuations in the matching model: inspecting the mechanism," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 19-50.
  24. Dolado Juan & Jansen Marcel & Jimeno Serrano Juan, 2007. "A Positive Analysis of Targeted Employment Protection Legislation," The B.E. Journal of Macroeconomics, De Gruyter, vol. 7(1), pages 1-30, July.
  25. Rosario Sanchez & Luis Toharia, 2000. "Temporary workers and productivity: the case of Spain," Applied Economics, Taylor & Francis Journals, vol. 32(5), pages 583-591.
  26. Cecilia Albert & Carlos García-Serrano & Virginia Hernanz, 2004. "Firm-provided training and temporary contracts," Spanish Economic Review, Springer, vol. 7(1), pages 67-88, January.
  27. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
  28. Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages F270-F295, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Sala, Hector & Silva, José I. & Toledo, Manuel E., 2008. "Flexibility at the Margin and Labor Market Volatility in OECD Countries," IZA Discussion Papers 3293, Institute for the Study of Labor (IZA).
  2. José I. Silva & Javier Vázquez-Grenno, 2012. "The ins and outs of unemployment in a two-tier labor market," Working Papers 2012/17, Institut d'Economia de Barcelona (IEB).
  3. Ioannis Kaplanis & Vassilis Monastiriotis, 2012. "Flexible Employment and Cross-Regional Adjustment," SERC Discussion Papers 0100, Spatial Economics Research Centre, LSE.
  4. García Serrano, Carlos, 2012. "Del pasmo al marasmo: El sector de la construcción y su relación con la crisis del empleo/The Construction Sector and its Relationship With the Employment Crisis," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 30, pages 183-182, Abril.
  5. José Ramón García Martínez & Valeri Sorolla, 2013. "Frictional and Non Frictional Unemployment in Models with Matching Frictions," Working Papers. Serie AD 2013-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iec:inveco:v:33:y:2009:i:2:p:145-178. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Isabel Sánchez-Seco).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.