The role of job interruptions, temporary contracts and multi-firm experiences in the temporality trap in Spain

The path to a permanent contract often implies a sequence of temporary jobs, multi-firms experiences and unemployment spells. This paper investigates whether the characteristics of the path may influence the chances to get a permanent contract and the duration itself at the nonpermanent state. We estimate a simple hazard model with unobserved heterogeneity to examine the average duration at the non-permanent position needed to get a permanent one, either in the same or in other firm. The analysis considers two different groups of workers specially affected by temporary contracts. These are the young workers who just enter into the labor market, and the long term unemployed. We find evidence of the existence of the temporality trap. The probability of accessing into a permanent contract is non linearly related to the duration at the non-permanent state. It starts increasing but once it reaches a maximum it drops to pretty low levels. Besides, repeated temporary contracts and job interruptions reduce it while multi-firm experiences seem do not affect it negatively.Temporary employment, temporality trap, Single risk models, Unobserved heterogeneity

The use of permanent contracts across Spanish regions: Do regional wage subsidies work?

This paper evaluates the effect of regional wage subsidies to foster permanent employment for a sample of temporary and unemployed Spanish workers. We study the transition into permanent employment using a new dataset based on administrative Social Security registers named “La Muestra Continua de Vidas Laborales”, which is used for the first time to carry out policy evaluation exercises in the Spanish labor market.Difference-in-differences, Evaluation Analysis, Wage Subsidies, Competing risk

Unemployment Insurance and Job Turnover in Spain

The aim of this paper is to shed some light on the potential relationships between the unemployment insurance system and labour market turnover, seeking to further the traditional view that this system has only behavioural consequences for the labour supply side of the labour market. This study assumes the incentives embedded in the unemployment insurance system have a heterogeneous impact, depending on the type of labour market transition (quits versus layoffs and recalls versus new job entrances) and on a worker’s attachment to the labour market (gender and type of contract). The layoff hazard rate increases as workers qualify for unemployment benefits, while the quit hazard rate remains stable. Similarly, employment inflow increases sharply after the exhaustion of unemployment benefits. The timing and importance of the exit differs between recalls and new job entry and depends on a worker’s attachment to the labour market. The results show that unemployment benefits appear to favour job turnover and both firms’ and workers´ decisions seem to matter.Unemployment Insurance, Job Turnover, Multivariate Mix Proportional Hazard Models, Recall and Layoffs, Employment and Unemployment Duration

Wage changes through job mobility in Europe: A multinomial endogenous switching approach

This paper presents evidence on the relationship between job mobility and wage mobility for some European countries using the European Community Household Panel (1994- 2001). While much of the earlier research uses least-squares regression to predict wages for individuals with different work experience, we find that it is important to take account of possible non-random selection between job movers and job stayers and between voluntary and involuntary movers. In this paper we focus on the effects of a spell of unemployment on subsequent wages by estimating a multinomial endogenous switching model composed of two selection equations and three wage equations. Our results indicate that job mobility through unemployment has negative returns in all the analysed economies. Relative to stayers, these losses range from 5% in Portugal to 22% in Germany.wage mobility, job mobility, unemployment, endogenous switching,multinomial probit, wage penalties

Do wage subsidies affect the subsequent employment stability of permanent workers?: the case of Spain

This article studies how job creation subsidies designed for several Spanish regional governments to foster the creation of new permanent contracts during the period 1997-2004 might affect the subsequent employment stability of the eligible workers. We use a triple difference approach that focuses on regional and temporal variability in individual eligibility conditions of these subsidies to obtain the causal effect of the policy. Our data comes from the Muestra Continua de Vidas Laborales (MCVL) and from a database that contains information on the policy analyzed. Our main result is that workers who are eligible for these subsidies face a higher probability of exiting from their current permanent contract than those who do not. These effects vary by age and gender, as well as by contract duration and contract type. This result is particularly relevant for male workers whose contracts also benefited with nationally subsidized payroll deductions and for women with such deductions but only during their first year of employment. During that initial first-year period, the exit rate among eligible workers in our sample increased by 9%, 21% and 16% for younger, middle-aged and older female workers, respectively, and by about 13% and 25% for younger and older male workers, respectively.labour market rotation, permanent contracts, wage subsidies, triple difference, causal inference, average treatment effects, duration model.

The use of permanent and temporary jobs across Spanish regions: Do unit labour cost differentials offer an explanation?

We study the use of permanent and temporary contracts across Spanish regions during the period 1995-2001. First we show that there are significant differences among the regional rates of permanent employment and that these differences tend to persist over time. To understand the underlying factors behind these observed differences we estimate a binary choice model for the individual probability of having a permanent contract, taking advantage of the panel data dimension of the Spanish Labour Force Survey. Our main results are that unit labour cost differentials, and thus labour productivity and total labour cost differentials, partially explain the divergence of regional permanent employment rates. Moreover, compared to the influence of regional fixed effects and other possible explanations such as sector specialisation or the presence of small firms in the region, unit labour costs explain more than two thirds of the observed variance in the permanent employment rate across Spanish regions, once all the relevant heterogeneity is taken into account .Temporary Employment, Unit Labour Costs, Random Effects, Spanish Regions.

The use of permanent and temporary jobs across Spanish regions: Do unit labour cost differentials offer an explanation?

We study the use of permanent and temporary contracts across Spanish regions during the period 1995-2001. First we show that there are significant differences among the regional rates of permanent employment and that these differences tend to persist over time. To understand the underlying factors behind these observed differences we estimate a binary choice model for the individual probability of having a permanent contract, taking advantage of the panel data dimension of the Spanish Labour Force Survey. Our main results are that unit labour cost differentials, and thus labour productivity and total labour cost differentials, partially explain the divergence of regional permanent employment rates. Moreover, compared to the influence of regional fixed effects and other possible explanations such as sector specialisation or the presence of small firms in the region, unit labour costs explain more than two thirds of the observed variance in the permanent employment rate across Spanish regions, once all the relevant heterogeneity is taken into account.Temporary Employment, Unit Labour Costs, Random Effects, Spanish Regions.

A Structural Estimation to Evaluate the Wage Penalty After Unemployment in Europe.

We develop a partial equilibrium job search model to analyse wage mobility and its relation to job mobility. The basic job search model is generalized by introducing wage renegotiation at the firm level and on-the-job search. Besides we model the value of leisure as a function of the previous wage. We present a semi-structural estimation using data on employment and wages for men 20 to 60 years old from the European Community Household Panel (Spain, Germany, France and Portugal). The estimated parameters from the model are then used to identify the sources of the wage loss associated with unemployment. German and Spanish workers tend to suffer larger wage penalties than their French and Portuguese counterparts. Wage losses in Germany are mainly related to better wage opportunities when employed. In Spain wage losses tend to remain longer since on the job wage growth is lower. We also evaluate the effect of the Unemployment Benefit system on wage changes after unemployment and find that a sole level for unemployment benefits (dependent on the national average wage level) reduces wage penalties for all workers with the exception of the highly educated.Semi-structural estimation, wage mobility, job mobility, search models

The use of permanent contracts across Spanish regions: Do regional wage subsidies work?

This paper evaluates the effect of regional wage subsidies to foster permanent employment for a sample of temporary and unemployed Spanish workers. We study the transition into permanent employment using a new dataset based on administrative Social Security registers named “La Muestra Continua de Vidas Laborales”, which is used for the first time to carry out policy evaluation exercises in the Spanish labor market. This dataset offers important advantages with respect to the Labour Force Survey, given it offers the complete labor history of the worker. Moreover, since we have individual, regional and time variation in our policy measure, we can apply a difference-in-differences estimator to identify the average treatment effect of this policy. Though, these regional policies have been implemented for almost ten years, as far as we know, this is the first attempt to evaluate them. Our main results are that, in average terms, this policy has positive but small effects on the transition rate into permanent employment either from a temporary contract or from unemployment. The incidence of these subsidies, however, is larger when the worker is in a temporary contract. It is also larger for young females while for old male workers do not have any effect. Measured at the average wage subsidy (5100 Euros) the total change in the entrance probability from a temporary to a permanent contract is around 26% for young women, 24% for middle age ones and 22% for middle age men, the most benefited workers. Nevertheless, since the transition rates to permanent contracts at the same firm are pretty low these relative changes hardly generate a change in the transition probability from a temporary to a permanent contract at the same firm. For instance, in the case of young women the estimated transition probability growths from 0.064% to 0.075% while for middle age men it changes from 0.039% to 0.041%.Difference-in-Differences, Evaluation Analysis, Wage Subsidies, Competing Riks

Nuevas estimaciones de la NAIRU de la economía española: métodos directos

En este trabajo proporcionamos diversas estimaciones de la NAIRU de la economía española para el período 1976-2000. Así, confrontamos los resultados que se obtienen para la economía española aplicando una batería de métodos directos (métodos basados en la curva de Phillips ampliada) bastante habituales en la literatura internacional de los últimos años. Entre otras cuestiones, prestamos atención a la robustez e imprecisión de estas estimaciones, a la causalidad en esta área y al fenómeno de histéresis en el desempleo. Aparte de encontrar evidencia de causalidad desde las desviaciones del desempleo observado respecto a las NAIRUs estimadas hacia la inflación, y de histéresis en el desempleo, nuestro análisis concluye que es necesario un esfuerzo de investigación adicional en esta área si deseamos seguir aplicando estos métodos a la economía española, por los problemas de falta de robustez y notable imprecisión detectados.In this article different NAIRU estimates for the Spanish economy in the period 1976-2000 are offered. The results obtained from the application of different direct methods (methods based on an extended Phillips curve) frequently used in the international literature in recent years are compared. Among other aspects, we pay attention to the robustness and precision of these estimates, to causality in this area and to the phenomenon of hysteresis in unemployment. Our results show that, although we find evidence of causality from the difference between observed unemployment and the NAIRU estimates to inflation, it is necessary an additional research effort in this area if we wish to continue applying this kind of methods for the Spanish economy, because we have detected problems of lack of robustness and precision. We have also found evidence of hysteresis in unemployment