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The effect of unemployment spells on subsequent wages in Spain

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  • Alfonso Rosolia
  • Gilles Saint Paul

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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Bibliographic Info

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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Web page: http://www.econ.upf.edu/

Related research

Keywords: Unemployment; unemployment duration; wages; job search; Spain; displacement; job loss;

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References

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  1. 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.
  2. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Upjohn Working Papers and Journal Articles 92-11, W.E. Upjohn Institute for Employment Research.
  3. Lazear, Edward P, 1976. "Age, Experience, and Wage Growth," American Economic Review, American Economic Association, vol. 66(4), pages 548-58, September.
  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. Houle, Mario & Van Audenrode, Marc, 1995. "Job displacement, wages, and unemployment duration in Canada," Labour Economics, Elsevier, vol. 2(1), pages 77-91, March.
  6. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  7. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
  8. William J. Carrington, 1993. "Wage Losses for Displaced Workers: Is It Really the Firm That Matters?," Journal of Human Resources, University of Wisconsin Press, vol. 28(3), pages 435-462.
  9. 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.
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Citations

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Cited by:
  1. Bentolila, S. & Ichino, A., 2000. "Unemployment and Consumption: are Job Losses Less Painful Near the Mediterranean?," Papers 0010, Centro de Estudios Monetarios Y Financieros-.
  2. Giulio Fella, 2007. "Optimal Severance Pay in a Matching Model," Working Papers 598, Queen Mary, University of London, School of Economics and Finance.
  3. repec:hal:cesptp:hal-00623282 is not listed on IDEAS
  4. Garcia Perez, Jose Ignacio & Rebollo Sanz, Yolanda, 2005. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Labour Economics, Elsevier, vol. 12(4), pages 531-555, August.
  5. José Ignacio García Pérez & Yolanda Rebollo Sanz, 2005. "A Structural Estimation to Evaluate the Wage Penalty after Unemployment in Europe," Economic Working Papers at Centro de Estudios Andaluces E2005/15, Centro de Estudios Andaluces.
  6. Arnaud Lefranc, 2003. "Labor Market Dynamics and Wage Losses of Displaced Workers in France and the United States," William Davidson Institute Working Papers Series 2003-614, William Davidson Institute at the University of Michigan.
  7. Lei Fang & Pedro Silos, 2012. "Wages and unemployment across business cycles: a high-frequency investigation," Working Paper 2012-16, Federal Reserve Bank of Atlanta.
  8. Amynah Vanessa Gangji & Robert Plasman, 2007. "The Matthew effect of unemployment: how does it affect wages in Belgium," DULBEA Working Papers 07-19.RS, ULB -- Universite Libre de Bruxelles.

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