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Evaluating Labor Market Reforms: A General Equilibrium Approach Author info | Abstract | Publisher info | Download info | Related research | Statistics Alonso-Borrego, César (Universidad Carlos III de Madrid)
Fernández-Villaverde, Jesús (University of Pennsylvania)
Galdon-Sanchez, José E. (Universidad Publica de Navarra and IZA Bonn)
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Job security provisions are commonly invoked to explain the high and persistent European unemployment rates. This belief has led several countries to reform their labor markets and liberalize the use of fixed-term contracts. Despite how common such contracts have become after deregulation, there is a lack of quantitative analysis of their impact on the economy. To fill this gap, we build a general equilibrium model with heterogeneous agents and firing costs in the tradition of Hopenhayn and Rogerson (1993). We calibrate our model to Spanish data, choosing in part parameters estimated with firm-level longitudinal data. Spain is particularly interesting, since its labor regulations are among the most protective in the OECD, and both its unemployment and its share of fixed-term employment are the highest. We find that fixedterm contracts increase unemployment, reduce output, and raise productivity. The welfare effects are ambiguous.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
1129.
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Length: 46 pages
Date of creation: Apr 2004Date of revision:
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Keywords: fixed-term contracts firing costs general equilibrium heterogeneous agents Other versions of this item:
Paper C¨¦sar Alonso-Borrego & Jes¨²s Fern¨¢ndez-Villaverde & Jos¨¦ E. Gald¨®n-S¨¢nchez, 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
Working Papers
10, Princeton University, Department of Economics, Industrial Relations Section..
[Downloadable!] César Alonso-Borrego & Jesús Fernández-Villaverde & José E. Galdón-Sánchez, 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
Economics Working Papers
we042307, Universidad Carlos III, Departamento de Economía.
[Downloadable!] Cesar Alonso-Borrego & Jesus Fernandez-Villaverde & Jose Galdon-Sanchez, 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
Working Papers
866, Princeton University, Department of Economics, Industrial Relations Section..
[Downloadable!] César Alonso-Borrego & Jesús Fernández-Villaverde & José E. Galdón-Sánchez, 2005.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
NBER Working Papers
11519, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) 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.
[Downloadable!] Find related papers by JEL classification: E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
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Other versions:
Alonso-Borrego, César & Fernández-Villaverde, Jesús & Galdon-Sanchez, José E., 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
IZA Discussion Papers
1129, Institute for the Study of Labor (IZA).
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Working Papers
10, Princeton University, Department of Economics, Industrial Relations Section..
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"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
Working Papers
866, Princeton University, Department of Economics, Industrial Relations Section..
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NBER Working Papers
11519, National Bureau of Economic Research, Inc.
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"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
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[Downloadable!] (restricted)
Other versions:
Alonso-Borrego, César & Fernández-Villaverde, Jesús & Galdon-Sanchez, José E., 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
IZA Discussion Papers
1129, Institute for the Study of Labor (IZA).
[Downloadable!] C¨¦sar Alonso-Borrego & Jes¨²s Fern¨¢ndez-Villaverde & Jos¨¦ E. Gald¨®n-S¨¢nchez, 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
Working Papers
10, Princeton University, Department of Economics, Industrial Relations Section..
[Downloadable!] César Alonso-Borrego & Jesús Fernández-Villaverde & José E. Galdón-Sánchez, 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
Economics Working Papers
we042307, Universidad Carlos III, Departamento de Economía.
[Downloadable!] Cesar Alonso-Borrego & Jesus Fernandez-Villaverde & Jose Galdon-Sanchez, 2004.
"Evaluating Labor Market Reforms: A General Equilibrium Approach ,"
Working Papers
866, Princeton University, Department of Economics, Industrial Relations Section..
[Downloadable!] 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.
[Downloadable!]
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