The ins and outs of unemployment in a two-tier labor market

José Silva and Javier Vázquez-Grenno
Authors registered in the RePEc Author Service: Javier Vázquez Grenno ()

Labour Economics, 2013, vol. 24, issue C, 161-169

Abstract: This paper aims to shed some light on the dynamics of the Spanish labor market, using data from the Spanish Labor Force Survey for the period 1987 to 2010. We examine transition rates in a three-state model and compare our results with those reported for the UK and the US. Explicitly, introducing the employment duality present in the Spanish labor market, we study labor market dynamics in a four-state model set-up and we compute the contribution of the different transitions rates to unemployment fluctuations. Our main findings are as follows: i) around 85% the employment–unemployment gross flows involve temporary contracts; ii) the transition rates involving temporary employment account for around 60% of the fluctuations in the unemployment rate; iii) almost 80% of the unemployment rate volatility – explained by movements between unemployment and employment – involves the transition rates to/from temporary jobs. Our overall conclusion points out that the employment duality is the key to understanding the unemployment volatility and the functioning of the Spanish labor market.

Keywords: Job finding rate; Job separation rate; Unemployment (search for similar items in EconPapers)
JEL-codes: E24 E32 J6 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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Related works:
Working Paper: The Ins and Outs of Unemployment in a Two-Tier Labor Market (2012)
Working Paper: The ins and outs of unemployment in a two-tier labor market (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:24:y:2013:i:c:p:161-169

DOI: 10.1016/j.labeco.2013.08.009

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