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Spanish Unemployment Persistence and the Ladder Effect

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  • Fabrice Collard
  • Raquel Fonseca
  • Rafael Munoz

Abstract

This paper aims to examine unemployment persistence in Spain by the soûcalled 'ladder' effect. This arises when highly-skilled workers who do not find a job matching their skills accept jobs which previously were occupied by less qualified staff. We develop a dynamic general equilibrium model, in which two types of workers ù characterised by their level of formal education ù coexist on the labour market. Highly educated workers are then assumed to compete with lowûskilled workers, generating a ladder eñect. The model is then calibrated on the Spanish economy. Our results replicate the observed decline in the ratio of high to lowûskilled vacancies, and explains how firms substitute high for lowûskilled employment. The results also suggest that the Spanish ladder effect may reflect increases in the training costs as a result of a biased-shock against low-skilled workers.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0538.

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Date of creation: Jul 2002
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Handle: RePEc:cep:cepdps:dp0538

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Matching models; low-skilled unemployment; mismatch;

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References

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  1. Luis Puch & Omar Licandro, . "Are there any special features in the Spanish business cycles?," Working Papers 97-06, FEDEA.
  2. Pieter A. Gautier, 1999. "Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Heterogeneous Workers," Tinbergen Institute Discussion Papers 99-075/3, Tinbergen Institute.
  3. van Ours, J. C. & Ridder, G., 1995. "Job matching and job competition: Are lower educated workers at the back of job queues?," European Economic Review, Elsevier, vol. 39(9), pages 1717-1731, December.
  4. repec:dgr:uvatin:2099075 is not listed on IDEAS
  5. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
  6. Juan José Dolado & Carlos García-Serrano & Juan F. Jimeno, . "Drawing Lessons from the Boom of Temporary Jobs in Spain," Working Papers 2001-11, FEDEA.
  7. Boucekkine, Raouf, 1995. "An alternative methodology for solving nonlinear forward-looking models," Journal of Economic Dynamics and Control, Elsevier, vol. 19(4), pages 711-734, May.
  8. F Green & Steven McIntosh & Anna Vignoles, 1999. "Overeducation and Skills - Clarifying the Concepts," CEP Discussion Papers dp0435, Centre for Economic Performance, LSE.
  9. Ours, J.C. van & Ridder, G., 1995. "Job Matching and Job Competition: Are Lower Educated Workers at the Back of Job Queues?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-142162, Tilburg University.
  10. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
  11. Carlos Díaz-Moreno & José E. Galdón-Sánchez, 2000. "Job creation, job destruction and the dynamics of Spanish firms," Investigaciones Economicas, Fundación SEPI, vol. 24(3), pages 545-561, September.
  12. Paul Krugman, 1994. "Past and prospective causes of high unemployment," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Jan, pages 49-98.
  13. DREZE, Jacques H. & SNEESSENS, Henri, 1994. "Technical Development, Competition from Low-Wage Economies and Low-Skilled Unemployment," CORE Discussion Papers 1994036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. repec:dgr:uvatin:1999075 is not listed on IDEAS
  15. Dolado, Juan J. & Felgueroso, Florentino & Jimeno, Juan F., 2000. "Youth labour markets in Spain: Education, training, and crowding-out," European Economic Review, Elsevier, vol. 44(4-6), pages 943-956, May.
  16. Ezequiel Uriel Jiménez & Pilar Beneito López & Javier Ferri Carreres & María Luisa Moltó Carbonell, 1996. "Desajuste educativo y formación laboral especializada: efectos sobre los rendimientos salariales," Working Papers. Serie EC 1996-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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Cited by:
  1. Eva MORENO-GALBIS & Henri SNEESSENS, 2007. "Low-skilled unemployment, capital-skill complementarity and embodied technical progress," Discussion Papers (REL - Recherches Economiques de Louvain) 2007031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. Sergio Destefanis & Raquel Fonseca, 2006. "Labour-Market Reforms and the Beveridge Curve. Some Macro Evidence for Italy," CSEF Working Papers 168, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  3. Pierrard, Olivier & Sneessens, Henri R., 2003. "Low-Skilled Unemployment, Biased Technological Shocks and Job Competition," IZA Discussion Papers 784, Institute for the Study of Labor (IZA).
  4. Eva, MORENO-GALBIS, 2004. "Unemployment and Endogenous Growth with Capital-Skill Complementarity," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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