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A Note on Changes in the Wage and Unemployment Structures in Spain - Evidence from the Luxembourg Income Study

  • Patrick A. Puhani


This note tests whether the extraordinary rise in Spanish unemployment in the 1980s can be traced back to rigidities in the wage structure in the face of relative net demand shocks against the unskilled (this claim is also known as the ‘Krugman hypothesis’). I can establish that youth joblessness is key to the Spanish unemployment problem, but sampling procedures in the data set make it impossible to track the youth unemployment problem across time in a satisfactory way. Even though high youth unemployment is consistent with the Krugman hypothesis, substantial skill upgrading of the Spanish labour force in the1980s explains why the low education groups did not experience an increase in relative unemployment.

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Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2002 with number 2002-27.

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Length: 26 pages
Date of creation: Sep 2002
Date of revision:
Handle: RePEc:usg:dp2002:2002-27
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  1. Goerlich, Francisco J & Mas, Matilde, 2001. "Inequality in Spain 1973-91: Contribution to a Regional Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 361-78, September.
  2. Puhani, Patrick A., 2002. "Relative wage and unemployment changes in Poland: microeconometric evidence," Economic Systems, Elsevier, vol. 26(2), pages 99-126, June.
  3. Adriana Kugler & Juan F. Jimeno & Virginia Hernanz, 2002. "Employment consequences of restrictive permanent contracts: Evidence from Spanish labor market reforms," Economics Working Papers 651, Department of Economics and Business, Universitat Pompeu Fabra.
  4. John P. Haisken-DeNew & Christoph M. Schmidt, . "Inter-Industry and Inter-Region Differentials: Mechanics and Interpretation," Working Papers 9504, SELAPO Center for Human Resources.
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