The use of permanent contracts across Spanish regions: Do regional wage subsidies work?

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

No 07.06, Working Papers from Universidad Pablo de Olavide, Department of Economics

Abstract: This paper evaluates the effect of regional wage subsidies to foster permanent employment for a sample of temporary and unemployed Spanish workers. We study the transition into permanent employment using a new dataset based on administrative Social Security registers named “La Muestra Continua de Vidas Laborales”, which is used for the first time to carry out policy evaluation exercises in the Spanish labor market. This dataset offers important advantages with respect to the Labour Force Survey, given it offers the complete labor history of the worker. Moreover, since we have individual, regional and time variation in our policy measure, we can apply a difference-in-differences estimator to identify the average treatment effect of this policy. Though, these regional policies have been implemented for almost ten years, as far as we know, this is the first attempt to evaluate them. Our main results are that, in average terms, this policy has positive but small effects on the transition rate into permanent employment either from a temporary contract or from unemployment. The incidence of these subsidies, however, is larger when the worker is in a temporary contract. It is also larger for young females while for old male workers do not have any effect. Measured at the average wage subsidy (5100 Euros) the total change in the entrance probability from a temporary to a permanent contract is around 26% for young women, 24% for middle age ones and 22% for middle age men, the most benefited workers. Nevertheless, since the transition rates to permanent contracts at the same firm are pretty low these relative changes hardly generate a change in the transition probability from a temporary to a permanent contract at the same firm. For instance, in the case of young women the estimated transition probability growths from 0.064% to 0.075% while for middle age men it changes from 0.039% to 0.041%.

Keywords: Difference-in-Differences; Evaluation Analysis; Wage Subsidies; Competing Riks (search for similar items in EconPapers)
JEL-codes: J38 J68 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2007-04
New Economics Papers: this item is included in nep-eec, nep-geo and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.upo.es/serv/bib/wps/econ0706.pdf First version, 2007 (application/pdf)

Related works:
Journal Article: The use of permanent contracts across Spanish regions: Do regional wage subsidies work? (2009)
Working Paper: The use of permanent contracts across Spanish regions: Do regional wage subsidies work? (2008)
Working Paper: The use of permanent contracts across Spanish regions: Do regional wage subsidies work? (2007)
Working Paper: The Use of Permanent Contracts Across Spanish Regions: Do Regional Wage Subsidies Work? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pab:wpaper:07.06

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