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How important is firm behaviour to understand employment?: evidence from Spain

By José E. Galdón-Sánchez

Abstract

Traditional macroeconomic analyses of the Spanish labor market have not beeen successful in accounting for Spain's high unemployment rates. In this paper, we take a micriecono,ic perspective,studying the entry and exit behaviorof Spanish firms and hence,their behavior concering job creation and job destruction. We calibrate a model economy with entry and exit to Spanish data and we find that the reduction of the dismissal tax from the equivalent of one year of wages to zero increase employment by 8.13 per cent, and productivity by 2.28 per cent

Topics: HD Industries. Land use. Labor
Publisher: Fundación SEPI
Year: 1999
OAI identifier: oai:eprints.lse.ac.uk:7180
Provided by: LSE Research Online
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