This paper aims to shed some light on the dynamics of the Spanish labor market, using data from the Spanish Labor Force Survey for the period 1987 to 2010. We examine transition rates in a three-state model and compare our results with those reported for the UK and the US. Explicitly introducing the employment duality present in the Spanish labor market, we study labor market dynamics in a four-state model set-up. We also analyze the behavior of these rates within two sub-periods of recession and a further two sub-periods of boom. We provide evidence of the cyclicality of the transition rates using unconditional and conditional correlations. Finally, we compute the contribution of the different transitions to unemployment rate volatility. Our over-all conclusion points out that the employment duality is the key to understand the unemployment volatility and the functioning of the Spanish labor market.JEL Codes: E24, E32, J6

This paper investigates the consequences of the legalization of around 600,000 immigrants by the unexpectedly elected Spanish government of Zapatero following the terrorist attacks of March 2004 (Garcia-Montalvo, 2011). Using detailed data from payroll-tax revenues, we estimate that each newly legalized immigrant increased local payroll-tax revenues by 4,189 euros on average. This estimate is only 55 percent of what we would have expected from the size of the influx of newly documented immigrants, which suggests that newly legalized immigrants probably earned lower wages than other workers and maybe affected the labor-market outcomes of those other workers. We estimate that the policy change deteriorated the labor-market outcomes of some low-skilled natives and immigrants and improved the outcomes of high-skilled natives and immigrants. This led some low-skilled immigrants to move away from high-immigrant locations. Correcting for internal migration and selection, we obtain that each newly legalized immigrant increased payroll-tax revenues by 4,801 euros, or 15 percent more than the estimates from local raw payroll-tax revenue data. This shows the importance of looking both at public revenue data and the labor market to understand the consequences of amnesty programs fully.

Job finding and exit rates, Immigrant assimilation, Search and matching models, E24, J61, J64,