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Labour Market Dynamics in Spanish Regions: Evaluating Asymmetries in Troublesome Times

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  • Sala, Hector

    () (Universitat Autònoma de Barcelona)

  • Trivín, Pedro

    () (Universitat Autònoma de Barcelona)

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 (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, but strong asymmetries in house prices, which are sticky in recession but notably reactive in expansion. 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 are more willing to migrate when a regional shock occurs in relatively worse economic contexts.

Suggested Citation

  • Sala, Hector & Trivín, Pedro, 2013. "Labour Market Dynamics in Spanish Regions: Evaluating Asymmetries in Troublesome Times," IZA Discussion Papers 7746, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7746
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. repec:bla:labour:v:31:y:2017:i:4:p:337-368 is not listed on IDEAS
    5. Smets, Frank & Beyer, Robert C. M., 2015. "Labour market adjustments in Europe and the US: How different?," Working Paper Series 1767, European Central Bank.
    6. Bande, Roberto & Martín-Román, Ángel L., 2017. "Regional differences in the Okun’s Relationship: New Evidence for Spain (1980-2015)," MPRA Paper 79833, University Library of Munich, Germany.
    7. NAGORE GARCIA Amparo & VAN SOEST Arthur, 2016. "Unemployment Exits Before and During the Crisis," LISER Working Paper Series 2016-14, LISER.
    8. Nagore Garcia, A. & van Soest, Arthur, 2016. "New Job Matches and their Stability before and during the Crisis," Discussion Paper 2016-033, Tilburg University, Center for Economic Research.

    More about this item

    Keywords

    regional labour markets; employment; Spain; unemployment;

    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

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