Reforming an Insider-Outsider Labor Market: The Spanish Experience
Centro de Estudios Monetarios y Financieros (CEMFI); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)
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)
Juan Francisco Jimeno-Serrano
Foundation for Applied Economic Research (FEDEA); Universidad de Alcala; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 6186
This paper presents a case study on reforming a very dysfunctional labor market with a deep insider-outsider divide, namely the Spanish case. We show how a dual market, with permanent and temporary employees makes real reform much harder, and leads to purely marginal changes that do not alter the fundamental features of labor market institutions. While the Great Recession and the start of the sovereign debt crisis triggered two labor reforms, the political economy equilibrium has not allowed them to be transformational enough.
Number of Pages in PDF File: 46
Keywords: temporary contracts, dualism, labor market reform, political economy, Great Recession
JEL Classification: H29, J23, J38, J41, J64
Date posted: December 17, 2011
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