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Spanish unemployment persistence and the ladder effect

Collard, Fabrice, Fonseca, Raquel and Munoz, Rafael (2002) Spanish unemployment persistence and the ladder effect. CEPDP, 538. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753015595

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Abstract

This paper aims to examine unemployment persistence in Spain by the soûcalled ''ladder'' effect. This arises when highly-skilled workers who do not find a job matching their skills accept jobs which previously were occupied by less qualified staff. We develop a dynamic general equilibrium model, in which two types of workers ù characterised by their level of formal education ù coexist on the labour market. Highly educated workers are then assumed to compete with lowûskilled workers, generating a ladder eñect. The model is then calibrated on the Spanish economy. Our results replicate the observed decline in the ratio of high to lowûskilled vacancies, and explains how firms substitute high for lowûskilled employment. The results also suggest that the Spanish ladder effect may reflect increases in the training costs as a result of a biased-shock against low-skilled workers.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2002 the authors
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J64 - Unemployment: Models, Duration, Incidence, and Job Search
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 538
Date Deposited: 29 Jul 2008 09:15
URL: http://eprints.lse.ac.uk/20073/

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