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The interplay of the unemployment compensation system, fixed-term contracts and rehirings

Author

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  • José María Arranz
  • Carlos García-Serrano

Abstract

Purpose - – Using a Spanish administrative data set, the authors document the importance of recalls in labour market transitions. The authors focus on two issues: the interplay between the unemployment compensation system, the widespread use of fixed-term contracts and the layoff-rehire process; and the use of implicit contracts and, hence, the existence of cross-subsidisation between industries and firms within unemployment insurance. The purpose of this paper is to estimate a duration model with competing risks of exits in order to investigate the individual, job and firm attributes that influence the probabilities of leaving unemployment to return to the same employer or to find a new job. The findings indicate that recalls are very common and that, although they are widespread among the labour market, there are certain types of contract, firms and sectors which are more prone to use them. Design/methodology/approach - – The authors estimate a duration model with competing risks of exits in order to investigate the individual, job and firm attributes that influence the probabilities of leaving unemployment to return to the same employer or to find a new job with a different employer. Findings - – The findings indicate that recalls are very common and that, although they are widespread along the Spanish labour market, there are certain types of contract, firms and sectors which are more prone to use them. Practical implications - – Overall, the results suggest that there is room for the reform of the way the UCS is financed, in combination with changes in other labour market institutions. Originality/value - – The contribution of this paper is twofold. First, it documents the importance of rehirings in labour market transitions, in general, and in compensated unemployment, in particular, highlighting the use of different types of contract (in particular, temporary ones) and using a large data set for Spain. Second, it examines the interplay between the unemployment compensation system, the use of temporary contracts and the layoff-rehire process, focusing its attention on the likely cross-subsidisation of firms and sectors with respect to unemployment benefits . This constitutes a relevant research and policy issue since it has to do with the design of the unemployment compensation system.

Suggested Citation

  • José María Arranz & Carlos García-Serrano, 2014. "The interplay of the unemployment compensation system, fixed-term contracts and rehirings," International Journal of Manpower, Emerald Group Publishing Limited, vol. 35(8), pages 1236-1259, October.
    • Handle: RePEc:eme:ijmpps:v:35:y:2014:i:8:p:1236-1259
    DOI: 10.1108/IJM-04-2012-0064
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    Citations

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    Cited by:

    1. J. Ignacio Conde-Ruiz & Manu García & Luis A. Puch & Jesús Ruiz, 2019. "Calendar effects in daily aggregate employment creation and destruction in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 10(1), pages 25-63, March.
    2. Samuel Bentolila & J. Ignacio García-Pérez & Marcel Jansen, 2017. "Are the Spanish long-term unemployed unemployable?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(1), pages 1-41, March.
    3. Juan Manuel Pérez-Salamero González & Marta Regúlez-Castillo & Carlos Vidal-Meliá, 2017. "The continuous sample of working lives: improving its representativeness," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(1), pages 43-95, March.
    4. Florentino Felgueroso & José-Ignacio García-Pérez & Marcel Jansen & David Troncoso-Ponce, 2018. "The Surge in Short-Duration Contracts in Spain," De Economist, Springer, vol. 166(4), pages 503-534, December.
    5. Francisco Guijarro, 2018. "Economic Recovery and Effectiveness of Active Labour Market Initiatives for the Unemployed in Spain: A Gender Perspective of the Valencian Region," Sustainability, MDPI, vol. 10(10), pages 1-15, October.
    6. Samuel Bentolila & J. Ignacio García-Pérez & Marcel Jansen, 2017. "Are the Spanish Long-Term Unemployed Unemployable?," Working Papers wp2018_1707, CEMFI.
    7. Vicente Núñez-Antón & Juan Manuel Pérez-Salamero González & Marta Regúlez-Castillo & Carlos Vidal-Meliá, 2020. "Improving the Representativeness of a Simple Random Sample: An Optimization Model and Its Application to the Continuous Sample of Working Lives," Mathematics, MDPI, vol. 8(8), pages 1-27, July.
    8. Oskar Jost, 2022. "See you soon: fixed-term contracts, unemployment and recalls in Germany—a linked employer–employee analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(3), pages 601-626, August.
    9. Cueto, Begoña & Patricia, Suárez, 2014. "A review of active and passive labour market policies in Spain," MPRA Paper 60648, University Library of Munich, Germany.
    10. Arranz, José M. & García-Serrano, Carlos, 2020. "Does unemployment benefit duration affect inflows into unemployment? The impact of a law change for older workers," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    11. Cristina Lafuente, 2020. "Unemployment in administrative data using survey data as a benchmark," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 11(2), pages 115-153, June.

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