This paper presents a case study on reforming a very dysfunctional labour 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...

This paper analyses the wage formation process in Spain taking into account the effect of the institutional change caused by the creation of low-firing-cost, fixed-term labour contracts. An insider-outsider model which assumes that the interests of workers under these contracts are disregarded...

This paper formulates a discrete-time model to study the effects of firing costs on labour demand by a firm facing linear adjustment costs under serially independent productivity shocks. We show that a rise in firing costs reduces the firm's marginal propensities to hire and fire, and may...

This paper analyzes the strikingly different response of unemployment to the Great Recession in France and Spain. Their labor market institutions are similar and their unemployment rates just before the crisis were both around 8%. Yet, in France, unemployment rate has increased by 2 percentage...

We use a unique dataset to estimate the impact of a large credit supply shock on employment in Spain. We exploit marked differences in banks' health at the onset of the Great Recession. Several weak banks were rescued by the State and they reduced credit more than other banks. We compare...

We construct a three-country, two-bloc, multi-product trade model in which tariff agreements between customs union members are binding whereas inter-bloc tariff agreements are self-enforcing. Our main objective is to explore how the liberalization of trade between customs union members (i.e. the...

The paper sees countertrade - the tying of trade flows - as an insurance contract that mitigates contractual hazards and reduces the incentive for ex post `hold-up' when parties are `locked' in a relationship after they have made specific investment. This way tying is seen as a commitment device...

Many commentators purport to use the Kemp-Wan Theorem to discuss the effects of regional integration schemes on non-member countries, and to operationalize the theorem in terms of the share of member countries' imports from non-members. This paper shows that Kemp and Wan (1976) say nothing about...

In this paper we use detailed trade and production data and a theoretically consistent model of demand - the Almost Ideal Demand System - to estimate bilateral trade elasticities, the key parameters required for quantification of the effects of the `1992' programme. Initial results for 70 West...

We consider a simple three-country, multi-commodity trade model in which two custom union members that have successfully coordinated their external tariff policies are in the process of deepening the integration of their internal markets through the removal of tariffs on intra-union trade. Union...