Reforming an Insider-Outsider Labor MarketThe Spanish Experience
- Samuel Bentolila 1
- Juan J. Dolado 2
- Juan F. Jimeno 3
- 1 CEMFI
-
2
Universidad Carlos III de Madrid
info
-
3
Banco de España
info
Year of publication: 2011
Issue: 6
Type: Working paper
Abstract
This paper presents a case study on reforming a very dysfunctional labor market with a deep insider-outsider divide, namely the Spanish case. We show how a dual market, with permanent and temporary employees makes real reform much harder, and leads to purely marginal changes that do not alter the fundamental features of labor market institutions. While the Great Recession and the start of the sovereign debt crisis triggered two labor reforms, the political economy equilibrium has notallowed them to be transformational enough.