TY - JOUR
T1 - The macroeconomic impact of flexible labor contracts, with an application to Spain
AU - Bentolila, Samuel
AU - Saint-Paul, Gilles
N1 - Funding Information:
Correspondence to: Samuel Bentolila, CEMFI, San Marcos, 39, 28004 Madrid, Spain. *We thank Jo& M. Gonzilez for data processing, Luis Villanueva and staff of the Central de Balances de1 Banco de Espafia for help in data gathering, and the comments of our discussants Michael Burda and Larry Katz, and of Manuel Arellano, Anthony Atkinson, Juan Dolado, Gonzalo Mato, Stephen Nickell, Andrew Oswald, Robert Waldman, Steve Zeldes, the editors of Inuestigaciones Econdmicas, and of participants at seminars at Universidad Complutense and Universidad Carlos III of Madrid, and in Paris, Tel-Aviv, and the DELTA-ULB joint conference. Financial support from the Spanish Ministry of Labor and Social Security is acknowledged. Any remaining errors are our own.
PY - 1992/6
Y1 - 1992/6
N2 - This paper constructs a theoretical model to study the effects on employment of the introduction of flexible labor contracts (i.e., with low firing costs), which occurred in many European countries in the 1980s, and tests it with Spanish data. The model predicts that these contracts increase the size of employment's response to aggregate shocks, while decreasing its persistence. Also, at the time these contracts are introduced, employment overshoots its long-run level. An econometric estimation of labor demand with a panel of large Spanish industrial firms validates several of the model's implications, in particular the increase in employment's cyclical response.
AB - This paper constructs a theoretical model to study the effects on employment of the introduction of flexible labor contracts (i.e., with low firing costs), which occurred in many European countries in the 1980s, and tests it with Spanish data. The model predicts that these contracts increase the size of employment's response to aggregate shocks, while decreasing its persistence. Also, at the time these contracts are introduced, employment overshoots its long-run level. An econometric estimation of labor demand with a panel of large Spanish industrial firms validates several of the model's implications, in particular the increase in employment's cyclical response.
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U2 - 10.1016/0014-2921(92)90043-V
DO - 10.1016/0014-2921(92)90043-V
M3 - Article
AN - SCOPUS:0026475018
SN - 0014-2921
VL - 36
SP - 1013
EP - 1047
JO - European Economic Review
JF - European Economic Review
IS - 5
ER -