Uncertainty, firm heterogeneity and labour adjustments : evidence from European countries

La incertidumbre sobre la situación económica afecta significativamente a las empresas. La evidencia reciente muestra que es un factor de importancia creciente en la economía global, en especial, después del fuerte incremento que experimentó tras la última crisis económica, aunque, no afecta del mismo modo a todas las empresas. En este trabajo se pretende analizar la heterogeneidad de estos efectos, dependiendo de las características de las empresas. También se estudia cómo éstas utilizan diversos mecanismos de ajuste ante un incremento en la incertidumbre que las rodea. Con datos para 25 países europeos procedentes de la Wage Dynamics Network Survey se construye un conjunto de indicadores sobre la incertidumbre de la demanda a la que se enfrentan las empresas. Para ello, se combinan la variabilidad a nivel de país, sector y tamaño de empresa, para definir de forma lo más desagregada posible el entorno concreto en el que las empresas toman sus decisiones. En segundo lugar se estima el impacto que tiene un aumento de la incertidumbre en los mecanismos que utilizan para ajustar su demanda de trabajo. Los resultados indican que reducen la contratación y ajustan el empleo en mayor medida ante un incremento de incertidumbre a la que puedan estar expuestas. En concreto, un incremento de un 1 % en el indicador habría aumentado la probabilidad de congelar la contratación entre un 21 % y un 35 % durante el período 2010-2013. Además, las empresas también son más proclives a despedir a sus trabajadores ante un incremento de la incertidumbre. Estos mecanismos se ven significativamente más utilizados en empresas sujetas a restricciones financieras y se ha encontrado heterogeneidad a nivel de país. Por ejemplo, en aquellos países donde la legislación de protección al empleo es más restrictiva, la respuesta del empleo a incrementos en la incertidumbre es también mayorFirms are significantly affected by uncertainty about economic activity. Recent literature has shown that uncertainty is a factor of increasing importance in a globalized world, especially after its sharp increase during the last crisis. However, uncertainty did not impact all the firms in the same way. In this paper, we analyze if uncertainty may have different effects depending on firms’ characteristics. We would also like to understand how firms react to uncertainty diversely. Using data from the 3rd wave of the Wage Dynamic Network Survey for 25 European countries, we first construct a set of uncertainty indicators exploiting firms environment. We combine variability from country, sector and size at the firm level in order to disaggregate microeconomic uncertainty, which offers richer information than the traditional macroeconomic indicators. Secondly, we estimate the effect of uncertainty on labour adjustments. Results reveal that firms reduce hiring and increase the adjustment of labour demand with more frequency when uncertainty is higher. An increase of 1% in our uncertainty indicator increases the probability of having frozen hiring in between 21% to 35% during the period 2010-2013. Furthermore, other labour strategies have been also taken by firms, such as altering labour workforce: the more the uncertainty is, the more probability of recurring to individual layoffs. Significant effects have been found in firms subject to credit constraints, and country heterogeneity has also been studied: when EPL is stricter, labour response to uncertainty is also more significan

The recovery of private consumption in Spain by product type and household

Artículo de revistaThis article describes the behaviour of household spending during the period 2005-2015 based on information from the Household Expenditure Survey. The recent recovery in consumption was broad-based, but breaking down the data in terms of households’ characteristics, the recovery was stronger in those in which the main breadwinner was in work than in those in which he or she was not. By product type, spending on consumer durables, which had shrunk most during the crisis, grew strongest over the two-year period from 2014 to 2015. Despite the strong upturn in consumption in the most recent years of the period considered, in general, median levels of expenditure per household have not yet recovered pre-crisis level

Variation in the cyclical sensitivity of Spanish inflation : an initial approximation

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Price-cost mark-ups in the Spanish economy : a microeconomic perspective

This paper explores the dynamics of price-cost mark-ups using firm-level data, paying particular attention to the crisis period 2008-2011. To this end, we apply the econometric framework developed by Klette (1999) to a comprehensive sample of Spanish non-financial corporations in order to estimate price-cost mark-ups for the period 1995-2011 at the aggregate and sectoral levels. The results reveal a widespread pattern of increasing pricecost mark-ups since 2008, both by industry and firm size. Moreover, with the aim of interpreting the pattern identified in our findings, we also relate the changes in our industrylevel estimates of price-cost margins between 2007 and 2011 to some relevant industry characteristics suggested by the literature, with an emphasis on the extent of market power and of financial pressure. We find a positive and statistically significant association between the growth rate of estimated mark-ups and both our direct measure of market power and our proxy of financial pressureEste documento analiza la evolución dinámica de los márgenes precio-coste utilizando microdatos de empresas y prestando una atención particular al período de crisis (2008- 2011). Con este fin, se emplea el modelo econométrico desarrollado por Klette (1999) para estimar los márgenes precio-coste marginal a partir de una muestra muy amplia y representativa de sociedades no financieras españolas para el período 1995-2011, tanto a nivel agregado como por ramas de actividad y por tamaños de empresa. Los resultados de las estimaciones revelan un patrón creciente de los márgenes precio-coste bastante generalizado a partir de 2008, tanto por sector como por tamaño de empresa, tras una etapa previa de relativa estabilidad. Además, con el objetivo de interpretar dicho patrón creciente, se han estimado unas regresiones sencillas, que relacionan el cambio entre 2007 y 2011 en los márgenes empresariales en el ámbito del sector a dos dígitos con algunos determinantes sugeridos por la bibliografía económica, con un énfasis especial en los derivados del poder de mercado y de las tensiones financieras. Los resultados de este ejercicio de estimación muestran que existe una relación positiva y estadísticamente significativa entre la tasa de variación de los márgenes estimados y las medidas que aproximan el poder de mercado y el grado de presión financiera en cada rama de activida

Consumption dynamics in Spain by product type

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Recent housing market developments in Spain

Artículo de revistaAfter the sharp correction during the crisis, activity in the Spanish real estate sector commenced its recovery in early 2014. This improving trend has since been observable both in quantity and price-based indicators. However, this market is well known for its high heterogeneity due to the location of the properties, their type and the nationality of purchasers. The recent buoyancy seems to reflect, among other factors, positive labour market developments and the low cost of borrowing against a backdrop of gradual growth of loans for house purchas

Housing prices in Spain: convergence or decoupling?

Este documento trata de medir la sincronía cíclica de los precios de la vivienda entre las ciudades españolas y su evolución a lo largo del período considerado. Para ello, se utiliza un modelo con regímenes markovianos que identifica los ciclos de los precios de la vivienda para cada par de ciudades y, al mismo tiempo, obtiene la evolución de la relación entre esos ciclos. Finalmente, estas relaciones bilaterales se sintetizan en un índice agregado de sincronía del precio de la vivienda de las ciudades españolas. Las estimaciones indican una sincronización creciente entre los precios de la vivienda hasta 2009, y después un patrón de leve desacoplamiento. Además, el análisis identifica las ciudades que han contribuido mayormente a este desarrollo. Por último, se muestra que las diferencias en el crecimiento de la población y en la estructura productiva son los factores clave para explicar la evolución de la sincronía de los precios de la vivienda entre las ciudades españolas.In this article, we measure changes over time in the synchronization of housing price cycles across Spanish cities. In doing so, we rely on a regime-switching framework that identifies the housing price cycles of pairs of cities, and simultaneously infers the evolving relation between those cycles. These bilateral relationships are then summarized into an aggregate synchronization index of city-level housing cycles. The estimates suggest that Spanish housing prices have followed a convergence pattern, which picked in 2009 and slightly decreased afterwards. We also identify the cities that have been the main contributors to this convergence process. Moreover, we show that differences in population growth and economic structure are key factors to explain the evolution of housing price synchronization among Spanish cities

A procedure for short-term GDP forecasting

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Box 5. Accuracy of short-term economic projections during the pandemic: the importance of the cut-off date

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The response of private investment to an increase in public investment

Artículo de revistaSince the 2008 crisis, public investment as a proportion of GDP has declined significantly both in Spain and in other euro area countries. That trend recently came to an end, given that public expenditure has been bolstered in response to the health crisis and will be further reinforced in Spain by the EU funds received under the Next Generation EU (NGEU) programme. Public investment’s effect on economic activity will depend, among other factors, on its impact on private investment, the sign of which is, a priori, ambiguous. This article assesses the short-term relationship between public and private investment using the structural vector autoregressive (SVAR) approach. The results suggest that, on average, increases in public investment in Spain tend to generate a positive impact on private investment. In particular, an increase of 1% in public investment would be associated with an equivalent increase in private investment in the short term. This finding underscores the important role that NGEU could play in economic developments in the years ahead