Discussion Paper Details

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Title: Who Are the Insiders? Wage Setting in Spanish Manufacturing Firms

Author(s): Samuel Bentolila and Juan J. Dolado

Publication Date: January 1993

Keyword(s): Insiders, Outsiders and Temporary Labour Contracts

Programme Area(s): Human Resources

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.

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Bibliographic Reference

Bentolila, S and Dolado, J. 1993. 'Who Are the Insiders? Wage Setting in Spanish Manufacturing Firms'. London, Centre for Economic Policy Research.