Distributional Implications of Labor Market Reforms: Learning from Spain's Experience

February 13, 2020

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Format: Chicago

Ara Stepanyan, and Jorge Salas. Distributional Implications of Labor Market Reforms: Learning from Spain's Experience, (USA: International Monetary Fund, 2020) accessed October 6, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Spain’s structural reforms, implemented around 2012, have arguably contributed to a faster and stronger economic recovery. In particular, there is strong evidence that the 2012 labor market reforms increased wage flexibility, which helped the Spanish economy to regain competitiveness and create jobs. But the impact of these labor reforms on income inequality and social inclusion has not been analyzed much. This paper aims to shed light on this issue by employing an econometric decomposition procedure combined with the synthetic control method. The results indicate that the 2012 labor reforms have helped improve employment and income equality outcomes with no substantial impact on the overall risk of poverty. Nevertheless, the reforms appear to have induced a deterioration of average hours worked, in-work poverty, and possibly also of involuntary part-time employment.

Subject: Employment, Income distribution, Income inequality, Labor, Labor market reforms, National accounts

Keywords: Employment, Employment growth, Employment outcome, Employment protection reform, Employment protection regulation, Global, Income, Income distribution, Income inequality, Labor market inclusiveness, Labor market reforms, Part-time employment, Product market reform, Reform date, Social inclusion, Spain, Structural reforms, Synthetic control method, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/029
Stock No:

WPIEA2020029
ISBN:

9781513526874
ISSN:

1018-5941

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