Economics at your fingertips  

The effects of wage flexibility on activity and employment in Spain

Rafael Domenech (), Juan Ramón García and Camilo Ulloa

Journal of Policy Modeling, 2018, vol. 40, issue 6, 1200-1220

Abstract: In this paper we estimate the macroeconomic effects of the greater wage and firms’ internal flexibility promoted by the economic policies implemented since 2012, which changed markedly Spanish labour regulations. To do so, we propose a structural VAR that allows us to break down changes in main macroeconomic variables into different structural shocks. From a policy perspective, the estimation of the structural shocks allows us to simulate a counterfactual scenario, whereby we conclude that the effects of less rigid labour market are positive and significant. Our results suggest that, if these policies were implemented at the beginning of the crisis, they could have avoided a significant part of the falls in GDP and employment.

Keywords: Labour market; Reforms; Wage flexibility; Structural VAR (search for similar items in EconPapers)
JEL-codes: C32 E24 J08 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jpolmod.2018.08.002

Access Statistics for this article

Journal of Policy Modeling is currently edited by A. M. Costa

More articles in Journal of Policy Modeling from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2021-01-14
Handle: RePEc:eee:jpolmo:v:40:y:2018:i:6:p:1200-1220