Paul Roldan Blanco - Universitat Autonoma de Barcelona

Macro seminar
Time: 12h15 – 13h30 
Date: 13 th  October 2025

Salle 3001

Paul ROLDAN BLANCO (Universitat Autonoma de Barcolona) “Dual Labor Markets and the Equilibrium Distribution of Firms”

Abstract: We study the effects of dual labor markets —namely, the co-existence of fixed-term and openended contracts— on the allocation of workers within and across firms, the equilibrium distribution of firms, aggregate productivity, and welfare. Using rich Spanish administrative data, we document that the use of fixed-term contracts is very heterogeneous across firms within narrowly defined sectors. Particularly, there is a strong relationship between the share of temporary workers and firm size, which is positive when looking at within-firm variation but negative when looking at the variation between firms. To explain these facts, we write a directed search model of multi-worker firms, with ex-ante firm heterogeneity in technology types, and ex-post f irm heterogeneity in transitory productivity and in the composition of employment by contract type (fixed-terms or open-ended) and human capital accumulated on the job. In counterfactual exercises, we find that limiting the use of fixed-term contracts decreases the share of temporary employment and increases aggregate productivity, but it also reduces total employment and leads to an overall decline in total output and welfare. The increase in productivity comes from a better selection of firms, which more than offsets an increased misallocation of workers across firms.

Joint work: Josep PIJOAN-MAS

Organizer: Franck MALHERBERT