IDEAS home Printed from https://ideas.repec.org/a/spr/series/v5y2014i2p197-221.html
   My bibliography  Save this article

Labour market dynamics in Spanish regions: evaluating asymmetries in troublesome times

Author

Listed:
  • Hector Sala

    ()

  • Pedro Trivín

    ()

Abstract

The Spanish labour market disproportionately booms in expansions and bursts in recessions; meanwhile, its regions’ relative position persists: those with the highest unemployment rates in 1996 were also in the worse position in 2012. To examine this twofold feature, we apply Blanchard and Katz’s (Brookings Pap Econ Act 1:1–75, 1992 ) methodology and evaluate how the Spanish labour market reacts to regional employment shocks in a variety of cases. Shock responses are channelled via changes in unemployment, labour market participation, and spatial mobility. Our results provide evidence of asymmetric responses across business cycle phases (1996–2007 and 2008–2012). While changes in participation rates are the main adjustment mechanism in expansion, unemployment and spatial mobility become the central ones in recession. We also provide evidence of real wage rigidities in both periods, due to rigidities in both nominal wages and consumer prices. We conclude with a cluster analysis showing that high and low unemployment regions have similar responses in the short-run while, in the long-run, the former are more reactive in terms of spatial mobility. Overall, we provide evidence that people in a region are more willing to migrate (relative to the national average) when a regional shock occurs in relatively worse economic contexts. Copyright The Author(s) 2014

Suggested Citation

  • Hector Sala & Pedro Trivín, 2014. "Labour market dynamics in Spanish regions: evaluating asymmetries in troublesome times," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(2), pages 197-221, August.
  • Handle: RePEc:spr:series:v:5:y:2014:i:2:p:197-221
    DOI: 10.1007/s13209-014-0106-x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s13209-014-0106-x
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    2. Roberto Bande & Marika Karanassou, 2009. "Labour market flexibility and regional unemployment rate dynamics: Spain 1980–1995," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 181-207, March.
    3. Guenter W. Beck & Kirstin Hubrich & Massimiliano Marcellino, 2016. "On the Importance of Sectoral and Regional Shocks for Price‐Setting," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(7), pages 1234-1253, November.
    4. Jimeno, Juan F. & Bentolila, Samuel, 1998. "Regional unemployment persistence (Spain, 1976-1994)," Labour Economics, Elsevier, vol. 5(1), pages 25-51, March.
    5. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    6. Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages 270-295, June.
    7. Roberto Bande & Marika Karanassou, 2011. "The NRU and the Evolution of Regional Disparities in Spanish Unemployment," Working Papers 681, Queen Mary University of London, School of Economics and Finance.
    8. Hector Sala & José I. Silva & Manuel Toledo, 2012. "Flexibility at the Margin and Labor Market Volatility in OECD Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(3), pages 991-1017, September.
    9. Petteri Maki-Arvela, 2003. "Regional Evolutions in Finland: Panel Data Results of a VAR Approach to Labour Market Dynamics," Regional Studies, Taylor & Francis Journals, vol. 37(5), pages 423-443.
    10. Love, Inessa & Zicchino, Lea, 2006. "Financial development and dynamic investment behavior: Evidence from panel VAR," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(2), pages 190-210, May.
    11. Inés P. Murillo & Fernando Nuñez & Carlos Usabiaga, 2006. "Persistencia del desempleo regional: El caso del sur de España," Revista de Economía Laboral - Spanish Journal of Labour Economics, Asociación Española de Economía Laboral - AEET, vol. 3, pages 46-57.
    12. Roberto Bande & Marika Karanassou, 2014. "Spanish Regional Unemployment Revisited: The Role of Capital Accumulation," Regional Studies, Taylor & Francis Journals, vol. 48(11), pages 1863-1883, November.
    13. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2010. "Internal migration, regional labour market dynamics and implications for German East-West disparities: results from a Panel VAR," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 30(2), pages 159-189, September.
    14. Manuel Arellano & Olympia Bover, 2002. "Learning about migration decisions from the migrants: Using complementary datasets to model intra-regional migrations in Spain," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(2), pages 357-380.
    15. Lourens Broersma & Jouke van Dijk, 2002. "Regional labour market dynamics in the Netherlands," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(3), pages 343-364.
    16. Enrique Lopez-Bazo & Tomas Del Barrio & Manuel Artis, 2005. "Geographical distribution of unemployment in Spain," Regional Studies, Taylor & Francis Journals, vol. 39(3), pages 305-318.
    17. Paolo Mauro & Antonio Spilimbergo, 1999. "How Do the Skilled and the Unskilled Respond to Regional Shocks?: The Case of Spain," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 1-1.
    18. Stephen T. Marston, 1985. "Two Views of the Geographic Distribution of Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 100(1), pages 57-79.
    19. Maddala, G S & Wu, Shaowen, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
    20. Rogers, William H. & Winkler, Anne E., 2013. "The Relationship between the Housing & Labor Market Crises and Doubling-Up: An MSA-Level Analysis, 2005-2010," IZA Discussion Papers 7263, Institute of Labor Economics (IZA).
    21. Bande, Roberto & Fernández, Melchor & Montuenga, Víctor, 2008. "Regional unemployment in Spain: Disparities, business cycle and wage setting," Labour Economics, Elsevier, vol. 15(5), pages 885-914, October.
    22. J. Paul Elhorst, 2003. "The Mystery of Regional Unemployment Differentials: Theoretical and Empirical Explanations," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 709-748, December.
    23. Enrique López-Bazo & Elisabet Motellón, 2013. "The regional distribution of unemployment: What do micro-data tell us?," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 383-405, June.
    24. Fredriksson, Peter, 1999. "The Dynamics of Regional Labor Markets and Active Labor Market Policy: Swedish Evidence," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 623-648, October.
    25. repec:zbw:rwirep:0096 is not listed on IDEAS
    26. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bande, Roberto & Martín-Román, Ángel, 2018. "Regional differences in the Okun’s Relationship: New Evidence for Spain (1980-2015)," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 41, pages 137-165.
    2. Roberto Bande & Marika Karanassou & Héctor Sala, 2019. "Employment in Spanish regions: cost-control or growth-enhancing policies?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(3), pages 601-635, June.
    3. Cuéllar Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "A composed error model decomposition and spatial analysis of local unemployment," MPRA Paper 79783, University Library of Munich, Germany.
    4. Cristina Borra & Francisco Gómez-García, 2016. "Wellbeing at Work and the Great Recession: The Effect of Others’ Unemployment," Journal of Happiness Studies, Springer, vol. 17(5), pages 1939-1962, October.
    5. Alejandro Almeida & Aida Galiano & Antonio A. Golpe & Juan M. Martín, 0. "Regional unemployment and cyclical sensitivity in Spain," Letters in Spatial and Resource Sciences, Springer, vol. 0, pages 1-13.
    6. NAGORE GARCIA Amparo & VAN SOEST Arthur, 2016. "Unemployment Exits Before and During the Crisis," LISER Working Paper Series 2016-14, LISER.
    7. Amparo Nagore García & Arthur van Soest, 2017. "New job matches and their stability before and during the crisis," International Journal of Manpower, Emerald Group Publishing, vol. 38(7), pages 975-995, October.
    8. Ambra Poggi, 2019. "Regional labour markets in Spain: Can flexibility and local democracy reduce inefficiencies?," Papers in Regional Science, Wiley Blackwell, vol. 98(3), pages 1499-1516, June.
    9. Juan Jimeno & Tano Santos, 2014. "The crisis of the Spanish economy," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(2), pages 125-141, August.
    10. Alejandro Almeida & Aida Galiano & Antonio A. Golpe & Juan M. Martín, 2020. "Regional unemployment and cyclical sensitivity in Spain," Letters in Spatial and Resource Sciences, Springer, vol. 13(2), pages 187-199, August.
    11. Amparo Nagore García & Arthur Soest, 2017. "Unemployment Exits Before and During the Crisis," LABOUR, CEIS, vol. 31(4), pages 337-368, December.
    12. Smets, Frank & Beyer, Robert C. M., 2015. "Labour market adjustments in Europe and the US: How different?," Working Paper Series 1767, European Central Bank.
    13. Joan Miquel Verd & Oriol Barranco & Mireia Bolíbar, 2019. "Youth unemployment and employment trajectories in Spain during the Great Recession: what are the determinants?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-20, December.
    14. Patricia Peinado & Felipe Serrano, 2017. "Unemployment, wages and pensions," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 670-680, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roberto Bande & Marika Karanassou, 2011. "The NRU and the Evolution of Regional Disparities in Spanish Unemployment," Working Papers 681, Queen Mary University of London, School of Economics and Finance.
    2. Roberto Bande & Marika Karanassou, 2014. "Spanish Regional Unemployment Revisited: The Role of Capital Accumulation," Regional Studies, Taylor & Francis Journals, vol. 48(11), pages 1863-1883, November.
    3. Roberto Bande & Marika Karanassou, 2009. "Labour market flexibility and regional unemployment rate dynamics: Spain 1980–1995," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 181-207, March.
    4. Celia Melguizo, 2017. "An analysis of Okun’s law for the Spanish provinces," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 37(1), pages 59-90, February.
    5. Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2015. "When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1303-1325, August.
    6. Cuéllar Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "A composed error model decomposition and spatial analysis of local unemployment," MPRA Paper 79783, University Library of Munich, Germany.
    7. Werner, Daniel, 2013. "New insights into the development of regional unemployment disparities," IAB Discussion Paper 201311, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Sarantis LOLOS & Evangelia PAPAPETROU, 2012. "Unemployment disparities and persistence Assessing the evidence from Greek regions, 1981-2008," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 12(1), pages 69-90.
    9. Timothy J. Bartik, 2015. "How Effects of Local Labor Demand Shocks Vary with the Initial Local Unemployment Rate," Growth and Change, Wiley Blackwell, vol. 46(4), pages 529-557, December.
    10. Alpay Filiztekin, 2009. "Regional unemployment in Turkey," Papers in Regional Science, Wiley Blackwell, vol. 88(4), pages 863-878, November.
    11. Maria Francesca Cracolici & Miranda Cuffaro & Peter Nijkamp, 2007. "Geographical Distribution of Unemployment: An Analysis of Provincial Differences in Italy," Growth and Change, Wiley Blackwell, vol. 38(4), pages 649-670, December.
    12. Enrique López-Bazo & Elisabet Motellón, 2013. "The regional distribution of unemployment: What do micro-data tell us?," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 383-405, June.
    13. Roberto Bande & Marika Karanassou & Héctor Sala, 2019. "Employment in Spanish regions: cost-control or growth-enhancing policies?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(3), pages 601-635, June.
    14. Galiani, Sebastian & Lamarche, Carlos & Porto, Alberto & Sosa-Escudero, Walter, 2005. "Persistence and regional disparities in unemployment (Argentina 1980-1997)," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 375-394, July.
    15. Inmaculada Garcia-Mainar & Victor Montuenga-Gomez, 2003. "The Spanish Wage Curve: 1994-1996," Regional Studies, Taylor & Francis Journals, vol. 37(9), pages 929-945.
    16. Christian Bayer & Falko Jüßen, 2007. "Convergence in West German Regional Unemployment Rates," German Economic Review, Verein für Socialpolitik, vol. 8(4), pages 510-535, November.
    17. Catalina Amuedo-Dorantes & Sara De la Rica, 2010. "Immigrants’ responsiveness to labor market conditions and their impact on regional employment disparities: evidence from Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(4), pages 387-407, September.
    18. Bande, Roberto & Fernández, Melchor & Montuenga, Víctor, 2008. "Regional unemployment in Spain: Disparities, business cycle and wage setting," Labour Economics, Elsevier, vol. 15(5), pages 885-914, October.
    19. Sanna‐Mari Hynninen & Aki Kangasharju & Jaakko Pehkonen, 2009. "Matching Inefficiencies, Regional Disparities, and Unemployment," LABOUR, CEIS, vol. 23(3), pages 481-506, September.
    20. Mulhern, Alan & Watson, John, 2009. "Spanish internal migration: is there anything new to say?," Economics Discussion Papers 2009-1, School of Economics, Kingston University London.

    More about this item

    Keywords

    Employment; Unemployment; Regional labour markets; Spain; J20; E24; J61; R11;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:series:v:5:y:2014:i:2:p:197-221. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.