Job Match Quality throughout the Business Cycle in the Spanish Labour Market

Recent empirical evidence for the US economy suggests that job matches created during economic expansions turn out to be of better quality than job matches created during economic recessions. We discuss different measures of job mismatching for the Spanish labour market: (i) measures based on the degree of adjustment between job requirements and workers’ qualifications; and (ii) measures based on the duration of the job match (Jovanovic, 1979). Given our data limitations and the duality of the Spanish labour market we follow the second approach and define a good job match as a temporary contract that is converted into a permanent one. We find, as expected, that temporary matches created during periods of economic recession are less likely to be converted into permanent contracts than temporary matches created in periods of economic expansion. However, contrary to other available empirical findings for the US, this cyclical pattern of job match quality in the Spanish labour market appears to be due to a “stop-gap” job phenomenon: during recessions unemployed Spanish workers are more willing to accept jobs that require lower skills while they wait better opportunities when the business cycle recovers.