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The Effect of Unemployment Spells on Subsequent Wages in Spain

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Author Info
Alfonso Rosolia
Gilles Saint Paul

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Abstract

In our analysis we try and recover the wage loss from unemployment in Spain and see how it is affected by previous unemployment experience, unemployment duration, eligibility for unemployment benefits, and previous wages. We also study its variations across groups. Our main conclusion is that while there is some evidence that labour market rigidities tend to lower it, the wage loss of displaced workers is remarkably high: more than 30%, that is, twice the equivalent figure for the US and France. Wages in Spain suffer from a serious mismeasurement problems that we do our best to control, so that our results are less robust than the ones that would be obtained with better data sets. However, they indicate a large level of wage flexibility in Spain.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 295.

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Date of creation: Jun 1998
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Handle: RePEc:upf:upfgen:295

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Related research
Keywords: Unemployment unemployment duration wages job search Spain displacement job loss

Find related papers by JEL classification:
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies

References listed on IDEAS
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  1. James J. Heckman, 1982. "Heterogeneity and State Dependence," NBER Reprints 0298, National Bureau of Economic Research, Inc.
  2. 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. [Downloadable!] (restricted)
  3. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March. [Downloadable!] (restricted)
  4. Lazear, Edward P, 1976. "Age, Experience, and Wage Growth," American Economic Review, American Economic Association, vol. 66(4), pages 548-58, September. [Downloadable!] (restricted)
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  5. Daniel Cohen & Arnaud Lefranc & Gilles Saint-Paul, 1997. "French unemployment: a transatlantic perspective," Economic Policy, CEPR, CES, MSH, vol. 12(25), pages 265-292, October. [Downloadable!] (restricted)
  6. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September. [Downloadable!] (restricted)
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  7. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Blackwell Publishing, vol. 49(2), pages 217-27, April. [Downloadable!] (restricted)
  8. Heckman, James J & Borjas, George J, 1980. "Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence," Economica, London School of Economics and Political Science, vol. 47(187), pages 247-83, August. [Downloadable!] (restricted)
  9. Houle, Mario & Van Audenrode, Marc, 1995. "Job displacement, wages, and unemployment duration in Canada," Labour Economics, Elsevier, vol. 2(1), pages 77-91, March. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Giulio Fella, 2007. "Optimal Severance Pay in a Matching Model," Working Papers 07-02, Utrecht School of Economics. [Downloadable!]
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  2. Samuel Bentolila & Andrea Ichino, 2000. "Unemployment and Consumption: Are Job Losses Less Painful near the Mediterranean?," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  3. Yolanda Rebollo Sanz & José Ignacio García-Pérez, 2006. "A Structural Estimation to Evaluate the Wage Penalty After Unemployment in Europe," Working Papers 06.26, Universidad Pablo de Olavide, Departamento de Economía. [Downloadable!]
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  4. Amynah Gangji & Robert Plasman, 2007. "The Matthew effect of unemployment: how does it affect wages in Belgium," Working Papers DULBEA 07-19.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
  5. A. Lefranc, 2002. "Labor Market Dynamics and Wage Losses of Displaced Workers in France and the United-States," THEMA Working Papers 2002-15, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
    Other versions:
  6. José Ignacio García Pérez & Yolanda Rebollo Sanz, 2004. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Economic Working Papers at Centro de Estudios Andaluces E2004/70, Centro de Estudios Andaluces. [Downloadable!]
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