Job creation in Spain: Productivity, growth, labour market reforms or both

José Boscá, Javier Ferri, Javier Andrés () and Rafael Domenech

No 1013, Working Papers from BBVA Bank, Economic Research Department

Abstract: The benefits implied by changing the growth model are at the heart ofthe heated political and economic debate in Spain. Increases in productivity and the reallocation of employment towards more innovative sectors are defended as the panacea for most of the ills afflicting the Spanish economy. In this paper we use a DSGE model with price rigidities, and labour market search frictions a la Mortensen-issarides, to assess the effects of the change in the growth model onunemployment. In so doing, we assume that the vigorous demand shock which has been mostly responsible for recent economic growth in Spain will be successfully substituted by a productivity shock as the main driver of Spain‘s economic growth in the future. So we assume that we actually succeed in the so called \"change in the growth model\". We show that whatever the benefits that this change might bring to the Spanish economy, the time span needed to bring the unemployment rate down to the European average actually increases. We then analyze the impact of several reforms in the labour market and evaluate their interaction with the new growth model. We conclude that changes in the economic structure do not make labour reforms any less necessary, but rather the opposite if we want to shorten employment recovery significantly.

Keywords: productivitiy; labour market; general equilibrium (search for similar items in EconPapers)
JEL-codes: E24 E27 E65 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-05
New Economics Papers: this item is included in nep-dge, nep-eec, nep-eur, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bbvaresearch.com/wp-content/uploads/mi ... 13_tcm348-221513.pdf (application/pdf)

Related works:
Working Paper: Job Creation in Spain: Productivity Growth, Labour Market Reforms or both? (2009)
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: https://EconPapers.repec.org/RePEc:bbv:wpaper:1013

Access Statistics for this paper

More papers in Working Papers from BBVA Bank, Economic Research Department Contact information at EDIRC.
Bibliographic data for series maintained by OSCAR DE LAS PENAS SANCHEZ-CARO ().