Tie me up, tie me down!the interplay of the unemployment compensation system, fixed-term contracts and rehirings

Resumen

Using an administrative dataset, we document the importance of recalls in labour market transitions and in compensated unemployment in Spain and examine the interplay between the unemployment compensation system, the widespread use of fixed-term contracts and the layoff-rehire process. We estimate a discrete-time duration model with competing risks of exits in order to investigate the individual, job and firm attributes that influence the probabilities of leaving unemployment to return to the same employer or to find a new job with a different employer. Our findings indicate that recalls are very common, with nearly half of job losers returning to their former employers, and that, although these are widespread along the Spanish labour market, there are certain types of contracts, firms and sectors which are more prone to them.