Flexibility at the margin and labour market volatility: the case of Spain

• Autores: Héctor Sala, José Ignacio Silva Becerra
• Localización: Investigaciones económicas, ISSN 0210-1521, Vol. 33, Nº 2, 2009, págs. 145-178
• Idioma: inglés
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• Dialnet Métricas: 8 Citas
• Resumen

  • The Spanish labour market is a prominent case of segmentation with flexibility at the margin (e.g., just a..ecting fixed-term employees). Flexibility at the margin produces a gap in separation costs between temporary and permanent workers which causes fixed-term contracts to be the main workforce adjustment device. It also leads to a productivity gap, due to high turnover and lack of on-the-job training of temporary employees. To explain the high volatility of the Spanish labour market we develop a matching model with temporary and permanent employees where these gaps play a central role. This model is calibrated and simulated to match the stylised facts and assess the cyclical implications of the 1984 and 1997 labour market reforms.