Working Paper Series, Uppsala Center for Labor Studies, Department of Economics, Uppsala University
José I. Silva
The Ins and Outs of Unemployment in a Two-Tier Labor Market
() and Javier Vázquez-Grenno
Abstract: This paper aims to shed some light on the dynamics of the
Spanish labor market, using data from the Spanish Labor Force Survey for
the period 1987 to 2010. We examine transition rates in a three-state model
and compare our results with those re- ported for the UK and the US.
Explicitly introducing the employment duality present in the Spanish labor
market, we study labor market dynamics in a four-state model set-up. We
also analyze the behavior of these rates within two sub-periods of
recession and a further two sub-periods of boom. We provide evidence of the
cyclicality of the transition rates using unconditional and conditional
correlations. Finally, we compute the contribution of the dierent
transitions to unemployment rate volatility. Our over- all conclusion
points out that the employment duality is the key to understand the
unemployment volatility and the functioning of the Spanish labor market.
Keywords: job finding rate; job separation rate; unemployment; (follow links to similar papers)
JEL-Codes: E24; E32; J60; (follow links to similar papers)
24 pages, May 25, 2012
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