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Are the Spanish Long-Term Unemployed Unemployable?

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  • Samuel Bentolila
  • J. Ignacio García-Pérez
  • Marcel Jansen

Abstract

Long-term unemployment reached unprecedented levels in Spain in the wake of the Great Recession and it still affects around 57% of the unemployed. We document the sources that contributed to the rise in long-term unemployment and analyze its persistence using state-of-the-art duration models. We find pervasive evidence of negative duration dependence, while personal characteristics such as mature age, lack of experience, and entitlement to unemployment benefits are key to understand the cross-sectional differences in the incidence of long-term unemployment. The negative impact of low levels of skill and education is muted by the large share of temporary contracts, but once we restrict attention to employment spells lasting at least one month these factors also contribute to a higher risk of long-term unemployment. Surprisingly, workers from the construction sector do not fare worse than similar workers from other sectors. Finally, self-reported reservation wages are found to respond strongly to the cycle, but much less to individual unemployment duration. In view of these findings, we argue that active labour market policies should play a more prominent role in the fight against long-term unemployment while early activation should be used to curb inflows.

Suggested Citation

  • Samuel Bentolila & J. Ignacio García-Pérez & Marcel Jansen, 2017. "Are the Spanish Long-Term Unemployed Unemployable?," CESifo Working Paper Series 6338, CESifo.
  • Handle: RePEc:ces:ceswps:_6338
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    1. Are the Spanish Long-Term Unemployed Unemployable?
      by maximorossi in NEP-LTV blog on 2018-02-21 12:44:35

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    5. Samuel Bentolila & J. Ignacio García-Pérez & Marcel Jansen, 2017. "Are the Spanish long-term unemployed unemployable?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(1), pages 1-41, March.
    6. Carrasco, Raquel & García-Pérez, J. Ignacio & Jimeno, Juan F., 2020. "Worker Flows and Wage Dynamics: Estimating Wage Growth without Composition Effects," IZA Discussion Papers 13942, Institute of Labor Economics (IZA).
    7. Rothe, Thomas & Wälde, Klaus, 2017. "Where did all the unemployed go? : Non-standard work in Germany after the Hartz reforms," IAB-Discussion Paper 201718, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Nezih Guner, 2017. "Introduction to the special issue on the Survey of Adult Skills (PIAAC)," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(4), pages 311-314, November.
    9. Kory Kroft & Fabian Lange & Matthew J. Notowidigdo & Matthew Tudball, 2019. "Long Time Out: Unemployment and Joblessness in Canada and the United States," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 355-397.
    10. Lucía Gorjón & Sara Rica & Antonio Villar, 0. "The Cost of Unemployment from a Social Welfare Approach: The Case of Spain and Its Regions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 0, pages 1-22.
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    13. Anna Sanz-de-Galdeano & Anastasia Terskaya, 2020. "The labor market in Spain, 2002–2018," IZA World of Labor, Institute of Labor Economics (IZA), pages 403-403, March.
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    More about this item

    Keywords

    long-term unemployment; great recession; duration models; survival probability; Spain;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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