Labour flexibility and wages: lessons from Spain.

SPAIN; EUROPE

Temporary jobs have been on the rise in Europe, partly in response to firms' desire for higher flexibility in employment, and partly because flexibility is widely believed to help bring down unemployment. However, the flexibility gained through temporary contracts hardly affects the core of permanent employees. Instead, temporary jobs result in the emergence of a dual labor market. This article examines the Spanish labor markets, which has gone furthest in promoting temporary employment. Spain provides an interesting and worrisome picture of what to expect if two-tier labor markets become prevalent in Europe.