A Comparative Study of The Portuguese and Spanish Labour Markets
AbstractSpain faces the highest unemployment rate among the European Union countries (22.2%), and Portugal one of the lowest (7.3%). However, superficially, these two countries share common labour market features: they both have the most stringent job security rules in the OECD, the architecture of their bargaining systems appears identical, and the generosity of their unemployment insurance systems seems, after 1989, roughly comparable. In this paper we address this puzzle by providing a systematic comparison of the Portuguese and Spanish labour markets. We find that, at a closer look, there are differences in unemployment benefits (non-existent in Portugal until 1985, and less generous nowadays, with the replacement ratio as a percentage of much lower wage level in Portugal), differences in wage flexibility (minimum wages by category established by collective agreements are set at a lower relative level in Portugal, giving employers more room for manoeuvre than in Spain), and, in practice higher firing costs in Spain. We conclude that a key factor in explaining the difference in Portuguese and Spanish unemployment rates since the late seventies is the wage adjustment process. In turn, the wage adjustment in the two countries may have been influenced by the unemployment benefit system and, to a lesser extent, by the degree of job protection.
Download InfoIf 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.
Bibliographic InfoPaper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w199801.
Date of creation: 1998
Date of revision:
Other versions of this item:
- Olympia Bover & Pilar García-Perea & Pedro Portugal, 1998. "A Comparative Study of the Portuguese and Spanish Labour Markets," Banco de Espaï¿½a Working Papers 9807, Banco de Espa�a.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Addison, John T. & Teixeira, Paulino, 1999. "Is Portugal really so arteriosclerotic? Results from a cross-country analysis of labor adjustment," ZEW Discussion Papers 99-30, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Stephen Nickell, 2003. "Labour Market Institutions and Unemployment in OECD Countries," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(2), pages 13-26, October.
- Stephen Nickell, 2003. "A Picture of European Unemployment: Success and Failure," CEP Discussion Papers dp0577, Centre for Economic Performance, LSE.
- Olivier Blanchard, 2006.
"European unemployment: the evolution of facts and ideas,"
CEPR & CES & MSH, vol. 21(45), pages 5-59, 01.
- Olivier Blanchard, 2005. "European Unemployment: The Evolution of Facts and Ideas," NBER Working Papers 11750, National Bureau of Economic Research, Inc.
- Sonsoles Castillo & Juan J. Dolado & Juan F. Jimeno, . "A tale of two neighbour economies: Does wage flexibility make the difference between Porguese and Spanish unemployment?," Working Papers 98-02, FEDEA.
- Stephen Nickell & Luca Nunziata & Wolfgang Ochel & Glenda Quintini, 2001. "The Beveridge Curve, Unemployment and Wages in the OECD from the 1960s to the 1990s - Preliminary Version," CEP Discussion Papers dp0502, Centre for Economic Performance, LSE.
- Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," Working Papers halshs-00586795, HAL.
- John FitzGerald & Jonathan Hore, 2002.
"Wage Determination in Economies in Transition: Ireland, Spain and Portugal,"
WP147, Economic and Social Research Institute (ESRI).
- John FitzGerald, 2001. "Wage Determination in Economies in Transition: Ireland Spain and Portugal," Papers WP141, Economic and Social Research Institute (ESRI).
- Rita Almeida, 2004.
"The labor market effects of foreign-owned firms,"
Policy Research Working Paper Series
3300, The World Bank.
- Olivier Blanchard & Pedro Portugal, 1998.
"What Hides Behind an Umemployment Rate: Comparing Portuguese and U.S. Unemployment,"
NBER Working Papers
6636, National Bureau of Economic Research, Inc.
- Olivier Blanchard & Pedro Portugal, 1998. "What Hides Behind An Unemployment Rate: Comparing Portuguese and Us Unemployment," Working Papers w199803, Banco de Portugal, Economics and Research Department.
- Ravi Balakrishnan, 2001. "The interaction of firing costs and on-the-job search: an application of a search theoretic model to the Spanish labour market," Banco de Espaï¿½a Working Papers 0102, Banco de Espa�a.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (DEE-NTDD).
If references are entirely missing, you can add them using this form.