Are unemployment benefits harmful to the stability of working careers? The case of Spain

Abstract

Unemployment insurance is usually found to show negative effects in the transition from unemployment to a new job. However, the extent to which workers' careers might improve or deteriorate as a result of the unemployment insurance system is not immediately clear. This paper addresses the effects of certain aspects of this system on employment stability by jointly accounting for benefits endogeneity, dynamic selection issues and occurrence dependence. The analysis is undertaken for a dual labour market, such as the market in Spain, where temporary and permanent workers differ with respect to numerous individual and labour market characteristics. We find that non-insured unemployed workers experience a greater rate of transition to employment than insured workers. But we also find that benefits encourage job stability for temporary workers not only by increasing subsequent job tenure but also by increasing the probability of entering into a permanent contract. Finally, we get that shortening the duration of the benefit entitlement period does not seem to lead to significant gains in overall employment stability, which increases at most by 4.3 %.Keywords Unemployment insurance · Multivariate mixed proportional hazard model · Job turnover · Employment stability · Employment dynamicsAn earlier version of this paper circulated under the title "Are there gains in employment stability by reducing unemployment benefit entitlement length? The case of Spain".

Are the Spanish long-term unemployed unemployable?

“…We assume that they choose the one with the higher length. For more information see Rebollo-Sanz and García-Pérez (2015). 16 According to the LFS, flows into construction from nonemployment were in 2014 equal to one-third of the level in 2008.…”

Determinants of attendance frequency to flamenco shows in Spain. A cultural economic approach

“…In the range holding 30 to 39 years, the most important reasons (as well as the "lack of time") are the "lack of money" and the "ignorance on the existence of shows". Regarding the "lack of money", it may find its explanation, on the one hand, in the actual situation of the labour market (Bande & Karanassou, 2013;Sala & Trivin, 2014;Rebollo-Sanz & García-Pérez, 2015;Jiménez-Martín et al, 2019) and, on the other hand, in the fact that, in an average way, in these age ranges a family starts to be formed and important expenses related to this start to appear (Han, Huang & Garfinkel, 2003;Hill, 2005).…”

Unemployment in administrative data using survey data as a benchmark

“…This restriction aims to exclude likely job-to-job transitions and small clerical errors. Other authors (seeRebollo-Sanz and García-Pérez 2015;Bentolila et al 2017 for example) also take this approach.19 The threshold, as stated before, is less than 360 days of employment, according to Spanish legislation. This threshold does not change for the period of study.20 The law in Spain does not allow to claim benefits for the days leftover in the last unemployment spell.…”

“…For her period of study(the 2005-2008 period), it makes sense to limit the length of unemployment spells given the low long-term unemployment rate. For studies that also looks at the recession period, the 3 years limit is preferred-see for example Rebollo-Sanz and García-Pérez (2015) andBentolila et al (2017).…”