Arbeitspapier

Two-tier labor markets in the great recession: France vs. Spain

This paper analyzes the strikingly different response of unemployment to the Great Recession in France and Spain. Their labor market institutions are similar and their unemployment rates just before the crisis were both around 8%. Yet, in France, unemployment rate has increased by 2 percentage points, whereas in Spain it has shot up to 19% by the end of 2009. We assess what part of this differential is due to the larger gap between the dismissal costs of permanent and temporary contracts and the less restrictive rules regarding the use of the latter contracts in Spain. Using a calibrated search and matching model, we estimate that about 45% of the surge in Spanish unemployment could have been avoided had Spain adopted French employment protection legislation before the crisis started.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 3269

Classification
Wirtschaft
Taxation and Subsidies: Other
Labor Demand
Wages, Compensation, and Labor Costs: Public Policy
Labor Contracts
Unemployment: Models, Duration, Incidence, and Job Search
Subject
Konjunktur
Arbeitsmarkt
Kündigungsschutz
Befristeter Arbeitsvertrag
Arbeitslosigkeit
Vergleich
Frankreich
Spanien

Event
Geistige Schöpfung
(who)
Bentolila, Samuel
Cahuc, Pierre
Dolado, Juan Jose
Le Barbanchon, Thomas
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2010

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Bentolila, Samuel
  • Cahuc, Pierre
  • Dolado, Juan Jose
  • Le Barbanchon, Thomas
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2010

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