Why are labor markets in Spain and Germany so different?
Miguel Casares () and
Economic Modelling, 2018, vol. 75, issue C, 320-335
The volatility of unemployment fluctuations has been about 3 times higher in Spain than in Germany over the recent business cycles (1996–2013). Besides, the rates of unemployment of these two countries have moved on opposite directions featuring negative cross correlation. We estimate a DSGE model with unemployment and find these explanatory factors: (i) wage rigidity has been higher in Spain, (ii) the elasticity of hours per worker has been lower in Spain, (iii) labor force shocks have been stronger and more persistent in Spain, (iv) risk-premium shocks have deteriorated labor demand in Spain while fiscal/net exports shocks have stimulated labor demand in Germany, and (v) the idiosyncratic shocks from the ECB single monetary policy have switched from reducing Spanish unemployment (before 2007) to increasing it (after 2007).
Keywords: Unemployment; Germany and Spain; DSGE models (search for similar items in EconPapers)
JEL-codes: E12 E23 E32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Why are labor markets in Spain and Germany so different? (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:75:y:2018:i:c:p:320-335
Access Statistics for this article
Economic Modelling is currently edited by S. Hall and P. Pauly
More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().