EconPapers    
Economics at your fingertips  
 

The underestimated virtues of the two-sector AK model

Gabriel Felbermayr and Omar Licandro ()

No 2003-13, Working Papers from FEDEA

Abstract: Temporary employment contracts allowing unrestricted dismissals were introduced in Spain in 1984 and quickly came to account for most new jobs. In 1997, however, the Spanish government attempted to reduce the incidence of temporary employment by reducing payroll taxes and dismissal costs for permanent contracts. In this paper, we exploit the fact that recent reforms apply only to certain demographic groups to set up a natural experiment research design to study the effects of contract regulations on employment and worker flows. Using data from the Spanish Labor Force Survey, we find that the reduction of payroll taxes and dismissal costs increased the employment of young men and women on permanent contracts, although the effects for young women are marginally significant. The results suggest a moderately elastic response of permanent employment to non-wage labor costs. We also find positive effects on the transitions from unemployment and temporary employment into permanent employment for young and older workers and from permanent employment to non- employment only for older men, suggesting that the reform had little effect on dismissals.

New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://documentos.fedea.net/pubs/dt/2003/dt-2003-13.pdf (application/pdf)

Related works:
Journal Article: The Underestimated Virtues of the Two-sector AK Model (2005) Downloads
Working Paper: The underestimated virtues of the two-sector AK model (2003) Downloads
Working Paper: The Under-Estimated Virtues of the Two-Sector AK Model (2002) Downloads
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:fda:fdaddt:2003-13

Access Statistics for this paper

More papers in Working Papers from FEDEA
Bibliographic data for series maintained by Carmen Arias ().

 
Page updated 2025-03-22
Handle: RePEc:fda:fdaddt:2003-13