THE PERFECT STORM: GRADUATING DURING A RECESSION IN A SEGMENTED LABOR MARKET

Using Spanish Social Security data merged with Labor Force Survey data, this article analyzes the effects of entry labor market conditions on workers’ careers two to three decades after graduating in Spain, a country well known for its highly segmented labor market and rigid labor market institution...

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Bibliographic Details
Published in:Industrial & labor relations review 2018-03, Vol.71 (2), p.492-524
Main Authors: FERNÁNDEZ-KRANZ, DANIEL, RODRÍGUEZ-PLANAS, NÚRIA
Format: Article
Language:English
Subjects:
Careers
Collective bargaining
College graduates
Contracts
Earnings
Economic models
Employment
Higher education
Labor force
Labor market
Labor relations
Minimum wage
Mobility
Probability
Recessions
Regulation
Social security
Wages & salaries
Workers
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Summary:Using Spanish Social Security data merged with Labor Force Survey data, this article analyzes the effects of entry labor market conditions on workers’ careers two to three decades after graduating in Spain, a country well known for its highly segmented labor market and rigid labor market institutions. In contrast to more flexible labor markets such as in the United States or Canada, the authors find that following a recession the annual earnings losses of individuals without a university degree are greater and more persistent than those of college graduates. For workers without a college degree, the effect is driven by a lower likelihood of employment. For college graduates, the negative impact on earnings is driven by both a higher probability of non-employment and employment in jobs with fixed-term contracts. Although a negative shock increases mobility of college graduates across firms and industries, no earnings recovery occurs for the individual, just secondary labor market job churning. Results are consistent with the tight regulations of the Spanish labor market, such as binding minimum wages and downward wage rigidity caused by collective bargaining agreements.
ISSN:0019-7939
2162-271X
DOI:10.1177/0019793917714205