Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/184659
Authors: 
Martín Román, Ángel L.
Cuéllar-Martín, Jaime
Moral de Blas, Alfonso
Year of Publication: 
2018
Series/Report no.: 
GLO Discussion Paper 274
Abstract: 
The relationship between the labor force participation and the business cycle has become a topic in the economic literature. However, few studies have considered whether the cyclical sensitivity of the labor force participation is influenced by “social effects”. In this paper, we construct a theoretical model to develop the “Added Worker Effect” and the “Discouraged Worker Effect”, and we integrate the “social effects”, coining a new concept, the Bandwagon Worker Effect (BWE). To estimate the cyclical sensitivity of the labor force participation, we employ a panel dataset of fifty Spanish provinces for the period 1977–2015. Finally, we use spatial econometrics techniques to test the existence of the BWE in the local labor markets in Spain. Our results reveal that there exists a positive spatial dependence in the cyclical sensitivity of the labor force participation that decreases as we fix a laxer neighborhood criterion, which verifies the existence of the BWE. From the perspective of economic policy, our work confirms that “social effects” play a key role at the time of determining the economic dynamics of the territories.
Subjects: 
Labor force participation
business cycle
regional labor markets
bandwagon effect
spatial dependence
JEL: 
C23
D03
E32
J21
R23
Document Type: 
Working Paper
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