What is it about?
Using a Spanish administrative dataset, we document the importance of recalls in labour market transitions. We focus on two issues: the interplay between the unemployment compensation system, the widespread use of fixed-term contracts and the layoff–rehire process; and the use of implicit contracts and, hence, the existence of cross subsidisation between industries and firms within unemployment insurance. We estimate a 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.
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Why is it important?
Our findings indicate that recalls are very common and that, although they are widespread among the labour market, there are certain types of contract, firms and sectors which are more prone to use them.
Perspectives
The contribution of this paper is twofold. First, it documents the importance of recalls in labour market transitions in general, and in compensated unemployment in particular, highlighting the use of different types of contract (in particular, temporary ones) and deploying a large dataset for Spain. Second, it examines the interplay between the UCS, the use of temporary contractual arrangements and the layoff–rehire process, focusing its attention on the likely cross-subsidisation of firms and sectors with respect to unemployment benefits. It constitutes a relevant research and policy issue since it has to do with the design of the UCS.
Carlos García-Serrano
Universidad de Alcala de Henares
Read the Original
This page is a summary of: The interplay of the unemployment compensation system, fixed-term contracts and rehirings, International Journal of Manpower, October 2014, Emerald,
DOI: 10.1108/ijm-04-2012-0064.
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