Catastrophic job Destruction during the Portuguese Economic Crisis

• Type: Article in International Scientific Journal
• Date: 2014

Authors

Anabela Carneiro (Author) FEP; Pedro Portugal (Author) Other; José Varejão (Author) FEP

Journal

Title: Journal of Macroeconomics

Vol. 39

Pages: 444-457

ISSN: 0164-0704

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 59 Citations

Scopus - 68 Citations

Other information

Authenticus ID: P-009-H8B

DOI: 10.1016/j.jmacro.2013.09.018

Abstract (EN): In this article we study the resilience of the Portuguese labor market, in terms of job flows, employment and wage developments, in the context of the current recession. We single out the huge contribution of job destruction, especially due to the closing of existing firms, to the dramatic decline of total employment and increase of the unemployment rate. We also document the very large increase in the incidence of minimum wage earners and nominal wage freezes. We explore three different channels that may have amplified the employment response to the great recession: the credit channel, the wage rigidity channel, and the labor market segmentation channel. We uncover what we believe is convincing evidence that the severity of credit constraints played a significant role in the current job destruction process. Wage rigidity is seen to be associated with lower net job creation and higher failure rates of firms. Finally, labor market segmentation seems to have favored a stronger job destruction that was facilitated by an increasing number of temporary workers.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 14