Working Paper: CEPR ID: DP1953
Authors: Sonsoles Castillo; Juan J. Dolado; Juan F. Jimeno
Abstract: In Portugal real wage flexibility, at the macroeconomic level, is noticeably higher, while unemployment duration is lower, when compared to Spain. This suggests that the hardship of being unemployed is higher in Portugal. Unemployment benefits and family insurance, which are the main buffer against unemployment and have played different roles in both countries, can explain this disparity. In this chapter we present some estimates of the loss of consumption suffered by unemployed workers relative to employed workers in Spain and Portugal. The estimates come from comparable data sets (cross-sections of the Household Budget Surveys). Our results confirm our prior findings: this loss is much more sizeable in Portugal.
Keywords: consumption; unemployment; unemployment insurance
JEL Codes: E21; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unemployment (J64) | Consumption (E21) |
| Higher Unemployment Benefits (J65) | Smaller Consumption Losses (D11) |
| Family Insurance Structures (G52) | Buffer Against Consumption Losses (E21) |
| Unemployment Benefits in Spain (J65) | Consumption Losses in Spain (E21) |
| Unemployment Benefits in Portugal (J68) | Consumption Losses in Portugal (E21) |
| Family Structure (J12) | Consumption Losses (E21) |