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A Tale of Two Neighbour Economies: Labour Market Dynamics in Spain and Portugal

Author

Listed:
  • Castillo, Sonsoles
  • Dolado, Juan J.
  • Jimeno, Juan F

Abstract

Spain and Portugal are two neighbour economies which share many characteristics. Spanish unemployment is more than double Portuguese unemployment, however. In this chapter we resort to Structural Vector Autoregression (SVAR) techniques to ascertain which shocks and what propagation mechanism underlie the functioning of the labour markets in both countries. Our results show that price adjustment is more sticky and that real wage flexibility is higher in Portugal. In line with this evidence, we find that, although shocks hitting both economies since the beginning of the eighties were not too dissimilar, their effects on unemployment were much more long-lasting in Spain than in Portugal.

Suggested Citation

  • Castillo, Sonsoles & Dolado, Juan J. & Jimeno, Juan F, 1998. "A Tale of Two Neighbour Economies: Labour Market Dynamics in Spain and Portugal," CEPR Discussion Papers 1954, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1954
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    References listed on IDEAS

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    7. Philippe Aghion & Peter Howitt, 1999. "On the Macroeconomic Effects of Major Technological Change," Nordic Journal of Political Economy, Nordic Journal of Political Economy, pages 15-32.
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    10. Cecilia Rouse & Claudia Goldin, 2000. "Orchestrating Impartiality: The Impact of "Blind" Auditions on Female Musicians," American Economic Review, American Economic Association, pages 715-741.
    11. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
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    Citations

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    Cited by:

    1. Constantina Kottaridi & Diego Mendez-Carbajo & Dimitrios Thomakos, 2007. "Inflation Dynamics and the Cross-Sectional Distribution of Prices in the E.U. Periphery," Working Papers 0004, University of Peloponnese, Department of Economics.
    2. Addison John T. & Teixeira Paulino, 2001. "Employment Adjustment in a “Sclerotic” Labour Market: Comparing Portugal with Germany, Spain, and the United Kingdom / Beschäftigungsanpassung in einem „sklerotischen“ Arbeitsmarkt: Ein Vergleich von ," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(4), pages 353-370, August.
    3. Constantina Kottaridi & Diego Mendez-Carbajo & Dimitrios Thomakos, 2007. "Inflation Dynamics and the Cross-Sectional Distribution of Prices in the E.U. Periphery," Working Papers 0004, University of Peloponnese, Department of Economics.
    4. repec:rim:rimwps:43-07 is not listed on IDEAS

    More about this item

    Keywords

    Persistence; Shocks; Structural VAR; Unemployment;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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