'Actual' Versus 'Virtual' Employment in Europe: Is Spain Different?

Posted: 18 Dec 1996

See all articles by Ramon Marimon

Ramon Marimon

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Fabrizio Zilibotti

Yale University; Centre for Economic Policy Research (CEPR)

Date Written: July 1996

Abstract

We study the evolution of sectoral employment and labor cost in 11 European countries over the last two decades. Our statistical approach consists of decompositions for country, industry and temporal effects. Virtual economies are constructed by filtering country effects. We find that sectoral effects account for more than 80% of the long-run differentials across countries and industries in employment growth, whereas country-specific effects are more important in the analysis of labor-cost dynamics. The initial distribution of labor across sectors plays a crucial role in explaining cross-country differences in employment. We pay special attention to Spain, a country that has experienced a high persistent unemployment rate, and show that this may be the result of a severe sectoral reallocation problem, originating from the very heavy weight of agricultural employment in 1975. Our study of the virtual economies also provides new evidence about the relative performance of some industries and countries, e.g., the poor performance of Belgium, the relatively good performance of Italy, in particular its textile sector, etc.

JEL Classification: C23, J21, J31, L60

Suggested Citation

Marimon, Ramon and Zilibotti, Fabrizio, 'Actual' Versus 'Virtual' Employment in Europe: Is Spain Different? (July 1996). Available at SSRN: https://ssrn.com/abstract=3611

Ramon Marimon (Contact Author)

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
+34 93 542 2707 (Phone)
+34 93 542 1746 (Fax)

HOME PAGE: http://www.econ.upf.es/crei/people/marimon/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Fabrizio Zilibotti

Yale University ( email )

New Haven, CT 06520
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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