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Publications
The Role of Immigration in a Deep Recession
European Economic Review, Volume 169, September 2024
This paper studies the impact of pre-Great Recession immigrant inflows on the labour market during a recession. It develops a random search model of the labour market featuring vacancy persistence, endogenous return migration, and wage rigidity. Consistent with the Spanish data, some immigrants in the model leave the country during the recession, freeing up jobs for natives. Yet, differences in match-quality draws between immigrants and natives also impact firms’ job creation decisions. The return-migration channel positively affects natives, while job creation effects are negative in the calibrated Spanish economy. I find that immigrants mitigate the impact of the recession and enhance natives’ welfare. 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 plays a key role, with short- and medium-run impacts on the native unemployment rate 6 times larger than all other channels combined.
Do Temporary Help Agencies Help? Employment Transitions for Low-Skilled Workers (joint with Belén Jerez, and Raquel Carrasco)
Labour Economics, Volume 90, October 2024
We investigate the impact of working for a temporary help agency (THA) compared to being directly hired on the employment transitions of low-skilled male temporary workers aged 20 to 45. Using data from Spanish administrative records, we employ competing risk discrete-time duration models to analyze multiple temporary employment spells. Our analysis reveals the importance of accounting for short-duration dependence and workers’ unobserved heterogeneity. We find that, across all durations, agency workers are more likely to transition either to unemployment or to a new THA contract than their direct-hire counterparts. Transitions to permanent positions, although infrequent in our sample, are also more likely for agency workers. Our qualitative findings hold when unobserved heterogeneity is not controlled for. However, this model underestimates the effect of agency contracts on the risk of entering unemployment and overestimates the impact on the probability of re-entering THA. This suggests that positive self-selection plays a relevant role in explaining the higher persistence of THA employment, but not the associated higher risk of unemployment.
Immigration and Labour Market Flows (joint with Andri Chassamboulli, Idriss Fontaine and Pedro Gomes)
Labour Economics, Volume 86, January 2024
We document facts about the labour-market transition rates of immigrants and natives in France, Spain and the US, for the period between 2003 and 2018. We find large differences in how immigrants’ labour-market transitions compare to those of natives across the three countries. Native-immigrant gaps in transition rates are not equal across nationalities of immigrants within each county, and cannot be explained by compositional differences in terms of observable characteristics such as education, age, sector or occupation. Our results point to other factors, such as human capital transferability, discrimination, type of migration and language proficiency as being more important determinants of immigrants’ labour market performance. Despite the differences across the three countries, using a VAR model we find a common stylized fact: inflows of foreign workers have a weak and mostly non-significant effect on the job-finding and job-separation rates of natives.
The Cyclicality of Immigrant Wages and Labour Market Flows: Evidence from Spain
Economics, Volume 16, No. 1, January 2022
This article studies the responses of real wages and labour market flows of immigrants in Spain for the period between 1999 and 2019. By 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, 1999–2007, 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 more than three times as high for immigrants than for natives. By 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 0.61 and 0.85% drop in real wages for natives and immigrants, respectively. However, these differences only occur among low-tenure workers. This study provides novel empirical evidence to enrich macroeconomic theories on the interaction of economic cycles and the impact of immigration
Undocumented Migration and Electoral Support: Evidence from Spain (with José L. Groizard)
Politics and Governance, Volume 9, No. 4, October 2021
Unwrapping the political discourse against immigration is key to understanding the rise of populism in Western democracies. A growing body of literature has found ample evidence that immigration pays a premium to conservative political forces that propose tighter policies. Using data on presidential elections in Spain from 2008 to 2019, we shed light on this debate by highlighting the role played by irregular migration. Some studies show that undocumented immigrants consume less and earn lower wages than documented immigrants with similar observable characteristics. In addition, since they are relegated to working in the informal sector, they cannot contribute to the welfare state with direct taxes. This suggests that undocumented migration might intensify support for right-wing politics and that the effect is independent from the one caused by the presence of documented migrants. We apply an instrumental variable strategy to deal with the non-random distribution of migrants across political districts. Our findings indicate that increasing undocumented migration increases support for the right, while increasing documented migration rises support for the left. When we consider the irruption of the far-right into electoral competitions, we find that undocumented migration redistributes votes from the left to the right, as has been observed in other countries.
Labour Market Flows: Accounting for the Public Sector (joint with Idriss Fontaine, Pedro Gomes and Diego Vila-Martin)
Labour Economics, Volume 62, January 2020
(Published version) (Draft) (Data)
For the period between 2003 and 2015, 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 France and UK but only 10 percent in Spain and United States. Private-sector workers would forgo 0.6 to 2.9 percent of their wage to have the same job security as public-sector workers.
Working Papers
Being young in Spain and the scars from recessions (joint with Andrés Erosa, and Matthias Kredler) (Conditionally Accepted at The Economic Journal)
Evidence from Spanish administrative data suggests that the Great Recession had long-lasting effects on employment and wages, with heterogeneous impacts across different demographic groups. To assess the long-run effects of recessions on workers' careers, we develop a model of cyclical fluctuations in the labor market. In the model, young workers are more likely to be employed in temporary jobs than older workers, increasing their likelihood of facing a job separation when a recession hits. Low job-finding rates during recessions imply that displaced workers will likely face a long period of unemployment and lower skill accumulation, feeding into worse future labor-market outcomes. Our results imply that high-school dropouts entering the economy at the start of the Great Recession suffered the highest lifetime earnings losses of about 12 percent. High-school and college graduates experienced losses of about 9 and 6 percent. The interaction between skill accumulation and the dual labor market drives the long-lasting effects of recessions, particularly for young workers entering the economy when a recession starts.
Who is moving? ;responses to regional shocks (joint with Cem Özgüzel) (Accepted at Research in Labor Economics)
Workers’ geographic mobility can balance differences across labour markets facing asymmetric shocks. However, not everybody moves. This paper provides the first cross-country evidence on the differential mobility responses of foreigners and natives to regional economic shocks in Europe (2003–2017). Unlike prior studies, we decompose net migration into inflows and outflows and distinguish responses during economic expansions and recessions. We find that foreigners’ in-migration rates drive population dynamics and react strongly to rising unemployment, while natives remain largely immobile. Using an instrumental variable approach, we show that foreigners adjust to negative shocks by reducing inflows rather than increasing outflows, but only during recessions. These findings highlight migration’s role in labour market adjustment and its cyclical nature, offering new insights into spatial economic resilience.
Temporary Agency Work and Labor Misallocation (joint with Belén Jerez, and Raquel Carrasco)
The triangular employment relationship between outsourced workers, intermediary employers, and user firms has received limited theoretical attention. This paper seeks to address this gap by focusing on temporary agency work. We develop a two-period labor search model in which firms can create jobs directly or through a temporary work agency (TWA). In both instances, match quality depends on unobservable attributes of workers and job vacancies. The agency acts as a matchmaker, providing flexibility by spreading termination risks across firms and certifying assignment quality through worker screening. However, worker poaching by user firms reduces the returns on the agency's investments in recruitment and screening. This hold-up problem leads to inefficient assignments, prolonged TWA employment spells, and insufficient job creation. As in the data, TWA employment is more relevant for less skilled workers. We also find that these workers are more likely to be trapped in inefficient assignments. The distortions affecting agency workers are more severe when wages in direct-hire jobs are set through Nash bargaining rather than directed search. Although the hold-up problem in our model can be solved with transfers from poaching clients to the agency, such transfers are illegal in most EU countries. The paper concludes by presenting simulations and using Spanish data to validate the theoretical framework.
Sharing my place: the local labor market impact of the P2P technology shock (joint with José L. Groizard and Ferrán Portella-Carbó)
The emergence of new digital business models, often called peer-to-peer (P2P) marketplaces, is transforming the hospitality industry. While its implications go beyond the industry, our knowledge of its aggregate impact is limited. This paper examines the effects of the P2P irruption on the local labor markets in Spain between 2016 and 2020. We exploit exogenous regulatory changes in short-term rentals (STRs) across different municipalities and periods to investigate the employment outcomes and job reallocation patterns in response to the P2P technology shock. Our findings reveal a strong and positive effect of P2P activity on local employment. A 10% increase in P2P overnights leads to an increase in local employment by 8.2 workers and a reduction in unemployment by 7.6 workers. This effect is pronounced across various sectors, including services, construction, and industry, while agriculture experiences an increase in unemployment. Our analysis indicates that the employment gain from P2P STRs varies across municipalities, with smaller non-touristy areas demonstrating the most substantial employment gains. In contrast, areas with intense competition from hotels experience a diminished effect.
The Size, Socio-Economic Composition and Fiscal Implications of the Irregular Immigration in Spain
This paper estimates the total number of irregular immigrants residing in Spain from 2002 to 2019 and studies their nationality, sex, gender, and sectoral composition. Using the residual method and combining microdata sources from the Spanish Labour Force Survey and Social Security registers I find that by the end of 2019, there were around 390,000-470,000 irregular immigrants in Spain, which account for 11-13% of the total non-EU immigrants. Irregular immigrants are younger than the regular ones, they are predominantly from South and Central America and they are concentrated in the accommodation and food activities and the activities household sector. Using the most updated wave of the EU-SILC data for Spain, I find a positive direct fiscal impact of non-EU immigration. This impact is 75% higher than for the natives' households, mainly explained by their younger age structure. Once education and health public systems are taken into account, the fiscal impact gap between the two types of households vanishes. I also find large fiscal costs associated with maintaining the irregularity status. Last, my estimates suggest that the potential positive gains from legalising the current irregular immigrants are around 3,300 euros yearly for a regularized worker.
Work in Progress
Dual labor markets, unemployment and career mobility (joint with Christopher Busch, Ludo Visschers and Eugenia González-Aguado)
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