Publication: Essays on labour market flows, immigration and persistence of temporary jobs
Loading...
Identifiers
Publication date
2020-04
Defense date
2020-05-15
Authors
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
Impact
Export
Abstract
In the last decades, the world economy experienced two striking transformations that shocked
labour markets around the world, specially in developed economies. The first one is the
boom in migration flows which caused an unprecedented increase in the labour force share
of foreign-born workers in many countries. The second one is related to the emergence
of the Great Recession in 2008, which had driven back the attention of macroeconomics
to understand the impact of economic cycles in the evolution of unemployment and other
macroeconomic aggregates. The rise in workers’ heterogeneity that resulted from the increase
in immigration is, interestingly, proven to be essential to fully comprehend this impact.
This dissertation aims to understand the heterogeneous impact of economic cycles on the
labour market outcomes of different workers’ groups (natives/immigrants, private/public
sector employees, temporary/permanent workers) and what are its implications on the overall
impact of economic cycles on welfare and macroeconomic aggregates.
In the first chapter, ‘Natives’ Responses to Immigration and the Cyclicality of Wages
and Labour Market Flows: Immigrants versus Natives’, I document a number of facts regarding the immigration experience in Spain for the period between 1999 and 2015. Using
Labour Force Survey microdata, I examine the cyclicality of job-finding and job-separation
rates for immigrants and natives over the long Spanish economic expansion and the sharp
contraction. During the expansion (until 2008) the job-finding rate was higher for immigrants
than for natives, but both rates converged to a lower level after the Great Recession took
place in 2008. I also find that the impact of the crisis on the job-separation rate was twice
as high for immigrants than for natives. Using longitudinal social security data, I find that
wage cyclicality is higher for immigrants than for natives: a one percentage point increase in
the unemployment rate is associated with a 0.65% and 0.95% drop in real wages for natives
and immigrants respectively. However, these differences only occur among low-tenure workers. Using the skill-cell approach, I study whether immigration is correlated with natives’
occupational upgrading or downgrading, regional mobility or changes in labour force participation. Immigration is positively correlated with natives’ occupational upgrading, while
none of the other adjustment’s margins are significant. This study provides novel empirical evidence to enrich macroeconomic theories on the interaction of economic cycles and the
impact of immigration.
In the second chapter, ‘The Role of Immigration in a Deep Recession’, I study the
impact of foreign-born workers on the labour market during a recession. This is relevant
as many economies experienced large immigrant inflows before the Great Recession took
place. To this end, I use a random search model of the labour market featuring vacancy
persistence, endogenous return migration and wage rigidity. Consistent with the Spanish
data, in the model some immigrants leave the country in the event of a recession, so they
free up jobs for natives. Yet, since immigrants and natives differ in their match quality
draws, immigrants also affect the firms’ job creation decision. While the return-migration
channel is unambiguously positive for native workers, the calibration results for the Spanish
economy suggest that the job-creation effect is negative. I find that immigrants smooth the
recession and improve the welfare of natives. During the recession, the native unemployment
rate would have been 2 percentage points higher in the absence of the pre-crisis immigration
boom. Return-migration is the key channel since its short and long-run impact on natives’
unemployment rate is 10 and 2 times as large as the sum of the impact of the other channels.
In the third chapter, ‘Lifetime Job Instability over the Life-Cycle’, co-authored with
Rub´en Veiga-Duarte, we quantify the incidence of temporary jobs for workers late in their
labour market career (at mid-career, defined as 30-35 years old). For that, we use Spanish
administrative data from the “Continuous Sample of Working Histories”, which allows us
to track workers’ entire labour marker history. We find that around 15 percent of workers
spend more than 50 percent of their mid-career active time in temporary jobs. We also find
a high degree of persistence in the time spent as temporary; workers spending most of their
young-age (20-30 years old) employed in temporary jobs experience higher job-separation
rates and find fewer permanent jobs later in their careers. Spending most of the young-time
in temporary jobs is also associated with lower wages (around 10%) in permanent jobs, even
at age 40. We then compare workers’ labour market performance at young-age conditional
on their time spent as temporary or permanent at mid-career. We find that both groups
start their careers with similar job-finding and job-separation rates in permanent jobs, but
differences increase as they age. Finally, while mid-career temporary workers have lower
wages in permanent jobs than mid-career permanent workers right from the beginning of
their career, this gap remains roughly constant over time. This empirical evidence will be
used to develop a theory that could help us to disentangle the underlying mechanisms that
explain the observed persistence in temporary employment.
In the forth chapter, ‘Labour market flows: Accounting for the public sector ’, coauthored with Idriss Fontaine, Pedro Gomes and Diego Vila-Martin, for the period between
2003 and 2018, we document a number of facts about worker gross flows in France, the
United Kingdom, Spain and the United States, focussing on the role of the public sector.
Using the French, Spanish and UK Labour Force Survey and the US Current Population
Survey data, we examine the size and cyclicality of the flows and transition probabilities between private and public employment, unemployment and inactivity. We examine the stocks
and flows by gender, age and education. We decompose contributions of private and public
job-finding and job-separation rates to fluctuations in the unemployment rate. Public-sector
employment contributes 20 percent to fluctuations in the unemployment rate in the UK, 15
percent in France and 10 percent in Spain and the US. Private-sector workers would forgo
0.5 to 2.9 percent of their wage to have the same job security as public-sector workers.