English, Article, Journal or magazine article edition: A Structural Estimation to Evaluate the Wage Penalty after Unemployment in Europe José Ignacio García Pérez; Yolanda Rebollo Sanz

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • A Structural Estimation to Evaluate the Wage Penalty after Unemployment in Europe
Author
  • José Ignacio García Pérez
  • Yolanda Rebollo Sanz
Physical Description
  • preprint
Notes
  • We develop a partial equilibrium job search model to analyse wage mobility and its relation to job mobility. The basic job search model is generalized by introducing wage renegotiation at the firm level and on-the-job search. Besides we model the value of leisure as a function of the previous wage. We present a semi-structural estimation using data on employment and wages for men 20 to 60 years old from the European Community Household Panel (Spain, Germany, France and Portugal). The estimated parameters from the model are then used to identify the sources of the wage loss associated with unemployment. German and Spanish workers tend to suffer larger wage penalties than their French and Portuguese counterparts. Wage losses in Germany are mainly related to better wage opportunities when employed. In Spain wage losses tend to remain longer since on the job wage growth is lower. We also evaluate the effect of the Unemployment Benefit system on wage changes after unemployment and find that a sole level for unemployment benefits (dependent on the national average wage level) reduces wage penalties for all workers with the exception of the highly educated.
  • Semi-structural estimation, wage mobility, job mobility, search models
  • RePEc:pab:wpaper:06.26
  • We develop a partial equilibrium job search model to analyse wage mobility and its relation to job mobility. The basic job search model is generalized by introducing wage renegotiation at the firm level, on-the-job search and heterogeneity of individuals through the value of time while unemployed. Transitions into and out of unemployment, movement from one job to another without passing through unemployment, and wage growth on the job are all outcomes of this model. We estimate the model structurally in order to identify the sources of wage mobility in four European countries: Spain, Germany, France and Portugal. We find that German and Spanish workers tend to suffer larger wage penalties after unemployment than their French and Portuguese counterparts. Wage losses in Germany are larger and mainly related to better wage opportunities when employed, while in Spain wage losses are lower but tend to remain longer since wage growth while employed is lower than in Germany. We also use the model's structural parameters to evaluate the effect that different changes in the Unemployment Benefit system may have on wage changes after unemployment. We determine that a sole level for unemployment benefits (dependent on the national average wage level) reduces wage penalties for all workers with the exception of the highly educated.
  • Structural estimation, wage mobility, job mobility
  • RePEc:cea:doctra:e2005_15
Language
  • English
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