Reforming an Insider-Outsider Labor Market: The Spanish Experience
44 Pages Posted: 14 Dec 2011
Date Written: December 14, 2011
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.
Keywords: temporary contracts, dualism, labor market reform, political economy, Great Recession
JEL Classification: H290, J230, J380, J410, J640
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