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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. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  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. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 7(3), pages 281-302, July.
  4. 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, London School of Economics and Political Science, vol. 47(187), pages 247-83, August.
  5. 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.
  6. Daniel Cohen & Arnaud Lefranc & Gilles Saint-Paul, 1997. "French unemployment: a transatlantic perspective," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 12(25), pages 265-292, October.
  7. Edward P. Lazear, 1974. "Age, Experience and Wage Growth," NBER Working Papers 0051, National Bureau of Economic Research, Inc.
  8. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
  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.
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Citations

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Cited by:
  1. Bentolila, Samuel & Ichino, Andrea, 2000. "Unemployment and Consumption: Are Job Losses Less Painful near the Mediterranean?," CEPR Discussion Papers 2539, C.E.P.R. Discussion Papers.
  2. 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.
  3. Giulio Fella, 2007. "Optimal Severance Pay in a Matching Model," Working Papers 598, Queen Mary, University of London, School of Economics and Finance.
  4. Arnaud Chéron & Jean-Olivier Hairault & François Langot, 2011. "Age-Dependent Employment Protection," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00623282, HAL.
  5. Lei Fang & Pedro Silos, 2012. "Wages and unemployment across business cycles: a high-frequency investigation," Working Paper, Federal Reserve Bank of Atlanta 2012-16, Federal Reserve Bank of Atlanta.
  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. 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, Department of Economics.
  8. Amynah Vanessa Gangji & Robert Plasman, 2007. "The Matthew effect of unemployment: how does it affect wages in Belgium," DULBEA Working Papers, ULB -- Universite Libre de Bruxelles 07-19.RS, ULB -- Universite Libre de Bruxelles.

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