Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/51791 
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 5742
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper analyses the labour markets of Spain and Ireland, which have experienced a severe downturn in the recent global crisis as reflected by the largest increases in their unemployment rates among other developed economies. Spain and Ireland might seem at first to feature very different labour markets, which go from very tight to very flexible labour conditions. Our analysis, however, goes beyond this simplistic argument and brings to light the strong commonalities that seem to have been hidden underground. We estimate a dynamic multi-equation structural model for each country, and then offer two sets of dynamic simulations which account for the swings of the unemployment rates before and after the 2007 crisis. Our results suggest looking beyond the degree of flexibility of both labour markets, just to focus instead on other variables usually neglected by more conventional approaches. In particular, such variables as the growth of capital stock, the growth of labour productivity, and demographics, succeed in explaining a great part of the changes in unemployment in both countries.
Subjects: 
unemployment dynamics
structural multi-equation models
chain reaction theory
simulations
PIGS
JEL: 
E24
J21
E22
C32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
548.38 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.