A tale of two neighbour economies: labour market dynamics in Portugal and Spain

Sonsoles Castillo and Juan F Jimeno
Authors registered in the RePEc Author Service: Juan J. Dolado

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: Portugal and Spain are two neighbour economies which share many characteristics. However, Spanish unemployment more than doubles Portuguese unemployment. In this chapter we resort to structural VAR techniques to ascertain which shocks and what propagation mechanism underlie the functioning of the labours markets in both countries. Our results show that price adjustment is more sticky and that real wage flexibility is higher in Portugal. In line with this evidence, we find that, although shocks hitting both economies since the beginning of the eighties were not too dissimilar, their effects on unemployment were much more long-lasting in Spain than in Portugal.

Keywords: Wage; flexibility; Vector; Autoregressions; Shocks; Unemployment; Spells (search for similar items in EconPapers)
Date: 1998-07
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:4154

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