IDEAS home Printed from https://ideas.repec.org/p/ptu/wpaper/w199801.html
   My bibliography  Save this paper

A Comparative Study of The Portuguese and Spanish Labour Markets

Author

Listed:
  • Pedro Portugal
  • Olympia Bover
  • Pilar García-Perea

Abstract

Spain faces the highest unemployment rate among the European Union countries (22.2%), and Portugal one of the lowest (7.3%). However, superficially, these two countries share common labour market features: they both have the most stringent job security rules in the OECD, the architecture of their bargaining systems appears identical, and the generosity of their unemployment insurance systems seems, after 1989, roughly comparable. In this paper we address this puzzle by providing a systematic comparison of the Portuguese and Spanish labour markets. We find that, at a closer look, there are differences in unemployment benefits (non-existent in Portugal until 1985, and less generous nowadays, with the replacement ratio as a percentage of much lower wage level in Portugal), differences in wage flexibility (minimum wages by category established by collective agreements are set at a lower relative level in Portugal, giving employers more room for manoeuvre than in Spain), and, in practice higher firing costs in Spain. We conclude that a key factor in explaining the difference in Portuguese and Spanish unemployment rates since the late seventies is the wage adjustment process. In turn, the wage adjustment in the two countries may have been influenced by the unemployment benefit system and, to a lesser extent, by the degree of job protection.

Suggested Citation

  • Pedro Portugal & Olympia Bover & Pilar García-Perea, 1998. "A Comparative Study of The Portuguese and Spanish Labour Markets," Working Papers w199801, Banco de Portugal, Economics and Research Department.
  • Handle: RePEc:ptu:wpaper:w199801
    as

    Download full text from publisher

    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp199801.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Antolin, Pablo & Bover, Olympia, 1997. "Regional Migration in Spain: The Effect of Personal Characteristics and of Unemployment, Wage and House Price Differentials Using Pooled Cross-Sections," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(2), pages 215-235, 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. Castillo, Sonsoles & Dolado, Juan José & Jimeno, Juan F., 1998. "The fall in consumption from being unemployed in Portugal and Spain," UC3M Working papers. Economics 4156, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Olivier Blanchard, 2006. "European unemployment: the evolution of facts and ideas [‘The macroeconomics of low inflation’]," Economic Policy, CEPR;CES;MSH, vol. 21(45), pages 6-59.
    3. Pedro Portugal & Olivier Blanchard, 1998. "What Hides Behind An Unemployment Rate: Comparing Portuguese and Us Unemployment," Working Papers w199803, Banco de Portugal, Economics and Research Department.
    4. John FitzGerald, 2001. "Wage Determination in Economies in Transition: Ireland Spain and Portugal," Papers WP141, Economic and Social Research Institute (ESRI).
    5. 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.
    6. Victor Aguirregabiria & Cesar Alonso-Borrego, 2014. "Labor Contracts And Flexibility: Evidence From A Labor Market Reform In Spain," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 930-957, April.
    7. Almeida, Rita, 2007. "The labor market effects of foreign owned firms," Journal of International Economics, Elsevier, vol. 72(1), pages 75-96, May.
    8. Castillo, Sonsoles & Dolado, Juan José & Jimeno, Juan F., 1998. "A tale of two neighbour economies: labour market dynamics in Portugal and Spain," UC3M Working papers. Economics 4154, Universidad Carlos III de Madrid. Departamento de Economía.
    9. repec:ces:ifodic:v:1:y:2003:i:2:p:14567946 is not listed on IDEAS
    10. Maria KARAMESSINI, 2008. "Continuity and change in the southern European social model," International Labour Review, International Labour Organization, vol. 147(1), pages 43-70, March.
    11. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," PSE Working Papers halshs-00586795, HAL.
    12. Stephen Nickell, 2003. "Labour Market Institutions and Unemployment in OECD Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(2), pages 13-26, October.
    13. Vansteenkiste, Isabel, 2017. "Did the crisis permanently scar the Portuguese labour market? Evidence from a Markov-switching Beveridge curve analysis," Working Paper Series 2043, European Central Bank.
    14. Ravi Balakrishnan, 2001. "The interaction of firing costs and on-the-job search: an application of a search theoretic model to the Spanish labour market," Working Papers 0102, Banco de España.
    15. Leonida Correia & Daniela Carvalho, 2016. "Cyclical Dynamics of Unemployment: Portugal versus the Euro Area," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 2(2), pages 149-166, April.
    16. Nickell, Stephen, 2003. "A picture of European unemployment: success and failure," LSE Research Online Documents on Economics 20039, London School of Economics and Political Science, LSE Library.
    17. Addison, John T. & Teixeira, Paulino, 1999. "Is Portugal really so arteriosclerotic? Results from a cross-country analysis of labor adjustment," ZEW Discussion Papers 99-30, ZEW - Leibniz Centre for European Economic Research.
    18. Nickell, Stephen & Nunziata, Luca & Ochel, Wolfgang & Quintini, Glenda, 2001. "The Beveridge curve, unemployment and wages in the OECD from the 1960s to the 1990s - preliminary version," LSE Research Online Documents on Economics 20113, London School of Economics and Political Science, LSE Library.
    19. Carrera, Leandro N. & Marina, Angelaki & Carolo, Daniel Fernando da Soledade, 2010. "Political competition and societal veto players: the politics of pension reform in Southern Europe," LSE Research Online Documents on Economics 27156, London School of Economics and Political Science, LSE Library.
    20. Stephen Nickell, 2003. "Labour Market Institutions and Unemployment in OECD Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(02), pages 13-26, October.

    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. Mohamed Amara & Hatem Jemmali, 2018. "Deciphering the Relationship Between Internal Migration and Regional Disparities in Tunisia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 313-331, January.
    2. Samuel Bentolila & Juan Jose Dolado & Juan F. Jimeno, 2008. "Two-tier Employment Protection Reforms: The Spanish Experience," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(4), pages 49-56, December.
    3. Herrera Gómez, Marcos & Ruiz Marín, Manuel & Mur Lacambra, Jesús, 2014. "Testing Spatial Causality in Cross-section Data," MPRA Paper 56678, University Library of Munich, Germany.
    4. Monastiriotis, Vassilis & Kaplanis, Ioannis, 2011. "Flexible employment and cross- regional adjustment," Working Papers 2072/179671, Universitat Rovira i Virgili, Department of Economics.
    5. Stephen Machin & Kjell G. Salvanes & Panu Pelkonen, 2012. "Education And Mobility," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 417-450, April.
    6. Vítor Martinho, 2011. "Analysis of net migration between the Portuguese regions," Working Papers 80, globADVANTAGE, Polytechnic Institute of Leiria.
    7. Dolado, Juan J. & Jimeno, Juan F., 1997. "The causes of Spanish unemployment: A structural VAR approach," European Economic Review, Elsevier, vol. 41(7), pages 1281-1307, July.
    8. Sandy Dall´erba & Dong Guo, 2009. "Structure of Interregional Migration Flows in Spain: 1998-2006," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República - ESPE, vol. 27(58), pages 264-276, August.
    9. Rabe, Birgitta & P. Taylor, Mark, 2010. "Differences in opportunities? Wage, unemployment and house-price effects on migration," ISER Working Paper Series 2010-05, Institute for Social and Economic Research.
    10. Aparicio Fenoll, Ainoa & Kuehn, Zoë, 2016. "Education Policies and Migration across European Countries," IZA Discussion Papers 9755, Institute of Labor Economics (IZA).
    11. Ainhoa Aparicio Fenoll & Zoë Kuehn, 2017. "Compulsory Schooling Laws and Migration Across European Countries," Demography, Springer;Population Association of America (PAA), vol. 54(6), pages 2181-2200, December.
    12. Kathleen Day & Stanley Winer, 2006. "Policy-induced internal migration: An empirical investigation of the Canadian case," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(5), pages 535-564, September.
    13. Wouter Vermeulen & Jos van Ommeren, 2007. "Does Land Use Planning shape Regional Economies?," Tinbergen Institute Discussion Papers 08-004/3, Tinbergen Institute.
    14. María Hierro, 2009. "Modelling the dynamics of internal migration flows in Spain," Papers in Regional Science, Wiley Blackwell, vol. 88(3), pages 683-692, August.
    15. J. Clemente & G. Larramona & V. Montuenga, 2013. "Scale and composition effects of human capital on Spanish regional migration," Applied Economics Letters, Taylor & Francis Journals, vol. 20(18), pages 1644-1647, December.
    16. 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.
    17. Stephan Russek, 2010. "Differential labour mobility and agglomeration," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 587-606, August.
    18. Amuedo-Dorantes, Catalina & Borra, Cristina, 2021. "The role of non-contributory pensions on internal mobility in Spain," Labour Economics, Elsevier, vol. 70(C).
    19. Carlos Usabiaga & Pablo Álvarez de Toledo & Fernando Núñez, 2013. "Labour Market Segmentation, Clusters, Mobility And Unemployment Duration With Individual Microdata," EcoMod2013 5688, EcoMod.
    20. 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.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    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:ptu:wpaper:w199801. 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: . General contact details of provider: https://edirc.repec.org/data/bdpgvpt.html .

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: DEE-NTD (email available below). General contact details of provider: https://edirc.repec.org/data/bdpgvpt.html .

    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.