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The Spanish Labor Market in a Cross-Country Perspective

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  • Ms. Florence Jaumotte

Abstract

The Spanish labor market is not working: the unemployment rate is structurally very high; wages are not very responsive to labor market conditions, causing a high cyclicality of unemployment; and the labor market is highly dual. Compared with the EU15, Spanish labor market institutions and policies stand out by the structure of its collective bargaining, which occurs mostly at an intermediate level, and by very high severance payments for permanent workers. Based on a quantitative analysis, the paper shows that moving away from the intermediate level of bargaining would go a long way toward bringing the unemployment rate closer to the EU15 average. The key reform needed to reduce the share of temporary workers is reducing employment protection of permanent workers. Substantially reforming the collective bargaining system and reducing the protection of permanent workers are likely to be highly complementary to secure a substantial reduction in the unemployment rate. The recent 2010 labor market reform attempts to address these issues, although its effects are still to materialize.

Suggested Citation

  • Ms. Florence Jaumotte, 2011. "The Spanish Labor Market in a Cross-Country Perspective," IMF Working Papers 2011/011, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/011
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    Citations

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    Cited by:

    1. Ms. Chie Aoyagi & Mr. Giovanni Ganelli, 2013. "The Path to Higher Growth: Does Revamping Japan’s Dual Labor Market Matter?," IMF Working Papers 2013/202, International Monetary Fund.
    2. Ana Karina Alfaro Moreno & José Javier Núñez Velázquez, 2019. "Utilization of Mixed Distributions in the Calculation of Polarization: The Case of Spain," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(3), pages 911-946, April.
    3. Servaas Storm & C.W.M. Naastepad, 2015. "NAIRU economics and the Eurozone crisis," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 843-877, November.
    4. Jordi López-Tamayo & Vicente Royuela & Jordi Suriñach, 2012. "“Building a “quality in work” index in Spain”," AQR Working Papers 201204, University of Barcelona, Regional Quantitative Analysis Group, revised Feb 2012.
    5. Ángel L. Martín‐Román & Jaime Cuéllar‐Martín & Alfonso Moral, 2023. "Natural and cyclical unemployment: A stochastic frontier decomposition and economic policy implications," Bulletin of Economic Research, Wiley Blackwell, vol. 75(1), pages 5-39, January.
    6. Mai Dao & Davide Furceri & Jisoo Hwang & Meeyeon Kim & Tae-Jeong Kim, 2014. "Strategies for Reforming Korea's Labor Market to Foster Growth," Working Papers 2014-25, Economic Research Institute, Bank of Korea.
    7. Lucy Qian Liu, 2018. "Regional Labor Mobility in Spain," IMF Working Papers 2018/282, International Monetary Fund.
    8. Aoyagi, Chie & Ganelli, Giovanni, 2015. "Does revamping Japan's dual labor market matter?," Economic Systems, Elsevier, vol. 39(2), pages 339-357.
    9. Keith A. Bender & Rebecca M. Neumann & John Douglas Skåtun, 2013. "Real and perceived losses from unemployment: a cross-country study," Applied Economics, Taylor & Francis Journals, vol. 45(25), pages 3625-3636, September.
    10. Raul Ramos & Esteban Sanromá & Hipólito Simón, 2016. "The part-time wage penalty: Does bargaining coverage outweigh regional differences in Spain?," The Economic and Labour Relations Review, , vol. 27(3), pages 368-386, September.
    11. Andrea ÉLTETÕ, 2011. "The economic crisis and its management in Spain," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 2, pages 41-55, June.
    12. Bergljot B Barkbu & Jesmin Rahman & Rodrigo O. Valdes, 2012. "Fostering Growth in Europe Now," IMF Staff Discussion Notes 12/07, International Monetary Fund.
    13. Michele Gazzola & Daniele Mazzacani, 2019. "Foreign language skills and employment status of European natives: evidence from Germany, Italy and Spain," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(4), pages 713-740, November.
    14. Mr. Bas B. Bakker, 2015. "Employment and the Great Recession: The Role of Real Wages," IMF Working Papers 2015/229, International Monetary Fund.
    15. García-Cintado, Alejandro & Romero-Ávila, Diego & Usabiaga, Carlos, 2015. "Can the hysteresis hypothesis in Spanish regional unemployment be beaten? New evidence from unit root tests with breaks," Economic Modelling, Elsevier, vol. 47(C), pages 244-252.
    16. Mislav Brkic, 2015. "Labor Market Duality and the Impact of Prolonged Recession on Employment in Croatia," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 17(1), pages 5-45, June.

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