Temping fates in Spain: Hours and employment in a dual labor market during the Great Recession and COVID-19

Christina Lafuente, Raül Santaeulalia-Llopis, Ludo Visschers

Research output: Contribution to journalArticlepeer-review

Abstract

We investigate the behavior of aggregate hours supplied by workers in permanent (open-ended) contracts and temporary contracts, distinguishing changes in employment (extensive margin) and hours per worker (intensive margin). We focus on the differences between the Great Recession and the start of the COVID-19 Recession. In the Great Recession, the loss in aggregate hours is largely accounted for by employment losses (hours per worker did not adjust) and initially mainly by workers in temporary contracts. In contrast, in the early stages of the COVID-19 Recession, approximately sixty percent of the drop in aggregate hours is accounted for by permanent workers that do not only adjust hours per worker (beyond average) but also face employment losses—accounting for one-third of the total employment losses in the economy. We argue that our comparison across recessions allows for a more general discussion on the impact of adjustment frictions in the dual labor market and the effects policy, in particular the short-time work policy (ERTE) in Spain.
Original languageEnglish
Number of pages45
JournalSERIEs - Journal of the Spanish Economic Association
Early online date2 Dec 2021
DOIs
Publication statusE-pub ahead of print - 2 Dec 2021

Keywords

  • recessions
  • dual labor markets
  • COVID-19
  • Spain
  • furloughs

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