Labour demand, flexible contracts and financial factors: new evidence from Spain

Andrew Benito () and Ignacio Hernando
Additional contact information
Andrew Benito: Banco de España

No 312, Working Papers from Banco de España

Abstract: We estimate models of labour demand for a panel of 3,400 Spanish manufacturing firms over the period 1985-2001. We examine the roles of flexible labour through temporary contracts, financial factors and a policy reform in 1997 affecting permanent contracts by lowering payroll taxes and dismissal costs. Compared to permanent employment, the demand for flexible labour displays (i) greater sensiti vity to financial factors (ii) greater cyclical sensitivity (iii) a larger average wage elasticity (iv) less inertia. Our analysis of the 1997 policy reform finds an effect of payroll taxes on employment. A 5 percentage point reduction in the payroll tax increases labour demand by 8 per cent.

Keywords: labour demand; financial pressure; temporary contracts (search for similar items in EconPapers)
JEL-codes: J23 J32 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2003-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/03/Fic/dt0312e.pdf First version, September 2003 (application/pdf)

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: https://EconPapers.repec.org/RePEc:bde:wpaper:0312

Access Statistics for this paper

More papers in Working Papers from Banco de España Contact information at EDIRC.
Bibliographic data for series maintained by Ángel Rodríguez. Electronic Dissemination of Information Unit. Research Department. Banco de España ().