This paper analyzes the role of furlough schemes when aggregate risk has a sector-specific component. In particular, our focus lies on the different responses of the Spanish labor market to the Great Recession and the recent pandemic crisis since both downturns have been driven by such a type of shocks. However, the pandemic episode involves much less job destruction than the previous recession, following firms’ widespread use of furlough schemes (ERTEs, by their Spanish acronym) which were hardly used before. A favorable effect of these policies is that they stabilize unemployment rates by allowing workers to remain matched with their employers in the most affected sectors. However, under their current design, it is argued that ERTEs crowd out labor hoarding exerted by employers in the absence of those schemes, as well as increase the volatility of working rates and output. In particular, we show, both theoretically and empirically, that ERTEs slow down worker reallocation away from declining sectors to other sectors not affected by those shocks.

This paper quantifies the impact of means-tested programs - in particular, Medicaid and Public Housing - on the interstate mobility of their beneficiaries. Simulations from a structural model with heterogeneous workers and locations show that beneficiaries' mobility falls by 17.2 percent, with the greatest reduction occurring among the poorest beneficiaries. Around half of this effect stems from the lack of federal coordination in the programs' administrations, i.e., the possibility that a moving beneficiary loses transfers despite being eligible for them. Reducing this probability to zero raises overall welfare, with 5 percent of low-income households obtaining a welfare gain of 1.1 percent.

When mobility between locations is frictional, a person’s economic well-being is partially determined by her place of birth. Using a life cycle model of mobility, we find that search frictions are the main impairment to the mobility of young people in Spain, and these frictions are particularly strong in economically distressed locations. As a result, being born in a high-unemployment urban area carries with it a large welfare penalty. Less stable jobs, slower skill accumulation, lower average wages, and fewer possibilities for geographic mobility all contribute to these welfare losses. Paying transfers to people in distressed economic locations decreases these welfare losses without large adverse effects on mobility. In contrast, several policies that encourage people to move to low-unemployment urban areas increase these welfare losses and fail to meaningfully increase mobility towards these more successful locations.

Monopsony power may be particularly strong over certain hierarchical occupations within firms, and production complementarities may amplify its adverse effects. To quantify this phenomenon, we extend a general equilibrium oligopsony model to include firm organization: managers increase production workers' productivity but also labor costs. In equilibrium, only high-productivity firms hire managers to grow large, contributing to occupation-specific markdowns. Using administrative data from Portugal, we quantify the model and validate it against quasi-experimental evidence on oligopsony and minimum wage effects. Relative to the efficient economy, welfare losses from monopsony are 3.4 and 2.4 percent for managers and production workers, respectively. Monopsony is stronger over managers because they sort into larger firms, view firms' non-wage attributes as less substitutable, and are less likely to be bound by the minimum wage. Through production complementarities, managers' monopsony alone explains one-fifth of the overall earnings losses from monopsony for production workers.

Online food delivery platforms typically operate through a controversial business model that relies on subcontracting self-employed workers, known as riders. We quantify the labor-market effects of the Spanish Riders' Law in 2021 that established the presumption of dependent employment for riders using a search and matching model. Riders with heterogeneous preferences for leisure trade off work flexibility and easier employability as self-employed against enjoying higher wages as employees. Our main finding is that the reform led to a higher share of employees but failed to fully absorb the large flows of workers transiting out of self-employment and decreased riders' wages, resulting in welfare losses. However, complementing the reform with a payroll tax cut for platforms hiring employees preserves employment levels and increases riders' welfare.