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A Note on Changes in the Earnings and Unemployment Structures in Spain Evidence from the Luxembourg Income Study

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  • Patrick A. Puhani

Abstract

This note tests whether the extraordinary rise in Spanish unemployment in the 1980s can be traced back to rigidities in the earnings structure in the face of relative net demand shocks against the unskilled (this claim is also known as the "Krugman hypothesis"). I can establish that youth joblessness is key to the Spanish unemployment problem, but sampling procedures in the data set make it impossible to track the youth unemployment problem across time in a satisfactory way. Even though high youth unemployment is consistent with the Krugman hypothesis, substantial skill upgrading of the Spanish labour force in the 1980s explains why the low education groups did not experience an increase in relative unemployment. (JEL J21, J31, J64)

Suggested Citation

  • Patrick A. Puhani, 2004. "A Note on Changes in the Earnings and Unemployment Structures in Spain Evidence from the Luxembourg Income Study," CESifo Economic Studies, CESifo Group, vol. 50(2), pages 299-317.
    • Handle: RePEc:oup:cesifo:v:50:y:2004:i:2:p:299-317.
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    File URL: http://hdl.handle.net/10.1093/cesifo/50.2.299
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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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