Explaining Youth Labour Market Problems in Spain: Crowding-Out, Institutions, or Technology Shifts?
Juan F Jimeno
Banco de España - Research Department; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics
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)
Universidad de Oviedo - Facultad de Economicas; Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper No. 2398
This paper examines the empirical evidence regarding the poor performance of the youth labour market in Spain over the last two decades, which entails very high unemployment for both higher and lower educated workers, symptoms of over-education, and low intensity of on-the-job training. It also presents a simple matching model with two types of workers ('educated' and 'non-educated') and two types of jobs ('skilled' and 'unskilled'), under which educated workers may crowd-out non-educated workers from their traditional entry jobs, showing that a combination of an increase in the relative supply of higher educated workers and rigid labour market institutions harms the training and labour market prospects of lower educated workers, while it raises the proportion of higher educated workers performing low-skill jobs.
JEL Classification: J63, J64
Date posted: August 11, 2000