A Structural Estimation to Evaluate the Wage Penalty After Unemployment in Europe

Yolanda Rebollo Sanz () and José Ignacio García-Pérez ()
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Yolanda Rebollo Sanz: Department of Economics, Universidad Pablo de Olavide
José Ignacio García-Pérez: Department of Economics, Universidad Pablo de Olavide
Authors registered in the RePEc Author Service: Yolanda F. Rebollo Sanz and J. Ignacio García Pérez ()

No 06.26, Working Papers from Universidad Pablo de Olavide, Department of Economics

Abstract: We develop a partial equilibrium job search model to analyse wage mobility and its relation to job mobility. The basic job search model is generalized by introducing wage renegotiation at the firm level and on-the-job search. Besides we model the value of leisure as a function of the previous wage. We present a semi-structural estimation using data on employment and wages for men 20 to 60 years old from the European Community Household Panel (Spain, Germany, France and Portugal). The estimated parameters from the model are then used to identify the sources of the wage loss associated with unemployment. German and Spanish workers tend to suffer larger wage penalties than their French and Portuguese counterparts. Wage losses in Germany are mainly related to better wage opportunities when employed. In Spain wage losses tend to remain longer since on the job wage growth is lower. We also evaluate the effect of the Unemployment Benefit system on wage changes after unemployment and find that a sole level for unemployment benefits (dependent on the national average wage level) reduces wage penalties for all workers with the exception of the highly educated.

Keywords: Semi-structural estimation; wage mobility; job mobility; search models (search for similar items in EconPapers)
JEL-codes: J31 J60 J64 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2006-10
New Economics Papers: this item is included in nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.upo.es/serv/bib/wps/econ0626.pdf First version, 2006 (application/pdf)

Related works:
Working Paper: A Structural Estimation to Evaluate the Wage Penalty after Unemployment in Europe (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:pab:wpaper:06.26

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