Abstract

http://ssrn.com/abstract=1716135
 
 

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Two-Tier Labor Markets in the Great Recession: France vs. Spain


Samuel Bentolila


Centro de Estudios Monetarios y Financieros (CEMFI); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Pierre Cahuc


National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA); French National Center for Scientific Research (CNRS); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Juan Jose Dolado


Universidad Carlos III de Madrid - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Thomas Le Barbanchon


French Ministry of Social Affairs, Labour and Solidarity (DARES); National Institute of Statistics and Economic Studies (INSEE)


IZA Discussion Paper No. 5340

Abstract:     
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.

Number of Pages in PDF File: 55

Keywords: temporary contracts, unemployment, Great Recession

JEL Classification: H29, J23, J38, J41, J64

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Date posted: November 29, 2010  

Suggested Citation

Bentolila, Samuel and Cahuc, Pierre and Dolado, Juan Jose and Le Barbanchon, Thomas, Two-Tier Labor Markets in the Great Recession: France vs. Spain. IZA Discussion Paper No. 5340. Available at SSRN: http://ssrn.com/abstract=1716135

Contact Information

Samuel Bentolila (Contact Author)
Centro de Estudios Monetarios y Financieros (CEMFI) ( email )
Casado del Alisal 5
28014 Madrid
Spain
+34 91 429 0551 (Phone)
+34 91 429 1056 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Pierre Cahuc
National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )
92245 Malakoff Cedex
France
University of Paris 1 Pantheon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA) ( email )
106-112 Boulevard de l'Hopital
Paris Cedex 13, 75647
France
+33 1 4117 3717 (Phone)
+33 1 4117 3724 (Fax)
HOME PAGE: http://eurequa.univ-paris1.fr/membres/cahuc/
French National Center for Scientific Research (CNRS)
106-112 Boulevard de l'Hopital
75647 Paris Cedex 13
France
+33 4 44 07 82 06 (Phone)
+33 4 44 07 82 02 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Juan Jose Dolado
Universidad Carlos III de Madrid - Department of Economics ( email )
Calle Madrid 126
Getafe, 28903
Spain
+34 91 624 9300 (Phone)
+34 91 624 9313 (Fax)
HOME PAGE: http://www.eco.uc3m.es/english/staff/
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Thomas Le Barbanchon
French Ministry of Social Affairs, Labour and Solidarity (DARES) ( email )
7, Square Max Hymans
F-75741 Paris Cedex 15
France
National Institute of Statistics and Economic Studies (INSEE) ( email )
15 Boulevard Gabriel Peri
92245 Malakoff Cedex, 1 92245
France
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References:  48
Citations:  12

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