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Jobfinding and Wages when Longrun Unemployment is Really Long: The Case of Spain

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  • Alfonso Alba-Ramirez
  • Richard B. Freeman

Abstract

This paper uses the "Encuesta de Condiciones de Vida Y Trabajo" (EGVT) -- a survey of the labor force activity of over 61,000 persons in Spain in 1985 when unemployment exceeded 20%--to examine the effect of unemployment insurance (UI) and family status on long-run joblessness. It finds that (1) duration of joblessness is some 30' longer for those eligible for UI benefits than for those ineligible for UI; (2) the long-term unemployed are disproportionately secondary workers for whom the family serves as a form of welfare; (3) hazard rates linking the chances of job finding to duration of unemployment in the 1981-85 period of massive joblessness did not decline with duration; (4) the length of unemployment spells reduces wages moderately but has huge effect on the probability that re-employed workers take secondary sector jobs; (5) the UI eligible earn more and are more likely to gain regular full-time jobs than those ineligible for UI, congruent with the additional months of job search associated with UI. The estimated effects of duration on the hazard and on earnings are consistent with the implications of labor supply and search analysis but not with the view that long unemployment spells create a class of unemployables. Our results imply a sizeable reduction in long-term unemployment with economic recovery.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3409.

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Date of creation: Aug 1990
Date of revision:
Handle: RePEc:nbr:nberwo:3409

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  1. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-80, October.
  2. repec:fth:prinin:249 is not listed on IDEAS
  3. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
  4. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
  5. repec:fth:harver:1439 is not listed on IDEAS
  6. Lawrence F. Katz, 1986. "Layoffs, Recall and the Duration of Unemployment," NBER Working Papers 1825, National Bureau of Economic Research, Inc.
  7. Burdett, Kenneth, 1979. "Unemployment Insurance Payments as a Search Subsidy: A Theoretical Analysis," Economic Inquiry, Western Economic Association International, vol. 17(3), pages 333-43, July.
  8. Michael Podgursky & Paul Swaim, 1987. "Job displacement and earnings loss: Evidence from the Displaced Worker Survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 41(1), pages 17-29, October.
  9. Burdett, Kenneth & Vishwanath, Tara, 1988. "Declining Reservation Wages and Learning," Review of Economic Studies, Wiley Blackwell, vol. 55(4), pages 655-65, October.
  10. Narendranathan, W & Nickell, S & Stern, J, 1985. "Unemployment Benefits Revisited," Economic Journal, Royal Economic Society, vol. 95(378), pages 307-29, June.
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Cited by:
  1. Encarnación Cordón Lagares & Félix García Ordaz, 2010. "Evaluación paramétrica y no paramétrica del desempleo pesquero en Marruecos: Una aplicación para el caso andaluz," Revista de Estudios Regionales, Universidades Públicas de Andalucía, vol. 1, pages 17-44.
  2. Stephen P. Jenkins & Carlos García-Serrano, 2000. "Re-Employment Probabilities for Spanish Men: What Role Does the Unemployment Benefit System Play?," Discussion Papers of DIW Berlin 216, DIW Berlin, German Institute for Economic Research.
  3. Alba, Alfonso, 1999. "Explaining the transitions out of unemployment in Spain : the effect of unemployment insurance," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4583, Universidad Carlos III de Madrid.
  4. Kugler, Adriana & Saint-Paul, Gilles, 2000. "Hiring and Firing Costs, Adverse Selection and Long-term Unemployment," IZA Discussion Papers 134, Institute for the Study of Labor (IZA).
  5. Olympia Bover & Manuel Arellano & Samuel Bentolila, 2002. "Unemployment Duration, Benefit Duration and the Business Cycle," Economic Journal, Royal Economic Society, vol. 112(479), pages 223-265, April.
  6. Maia Guell, 2000. "The effects of fixed-term contracts on the duration distribution of unemployment: the Spanish case," Working Papers 822, Princeton University, Department of Economics, Industrial Relations Section..

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