Who Are the Insiders? Wage Setting in Spanish Manufacturing Firms

Samuel Bentolila and Juan Dolado

No 754, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper analyses the wage formation process in Spain taking into account the effect of the institutional change caused by the creation of low-firing-cost, fixed-term labour contracts. An insider-outsider model which assumes that the interests of workers under these contracts are disregarded in wage bargains is set up and tested. The estimation of a wage equation for a sample of large Spanish manufacturing firms yields an estimate of the insider weight and confirms that an increase in the proportion of fixed-term employees increases insiders' wages.

Keywords: Insiders; Outsiders; Temporary Labour Contracts (search for similar items in EconPapers)
JEL-codes: E42 J23 (search for similar items in EconPapers)
Date: 1993-01
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Citations: View citations in EconPapers (15)

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