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 opportunities vary across locations and mobility is frictional, economic outcomes depend on birthplace. Using Spanish micro data and a life-cycle model, we show that location differences mainly reflect variation in (i) skill accumulation, (ii) job stability and opportunities, and (iii) information about alternative locations. For young individuals, information costs are the main barrier to mobility. Consequently, transfers to residents of distressed areas reduce inequality in economic outcomes with little effect on mobility. In contrast, policies that financially incentivize moving to high-opportunity locations increase inequality and do not significantly raise mobility toward those 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.

Digital platforms typically operate through a controversial business model that relies on subcontracting self-employed workers. We develop an equilibrium model of the labor market to quantify the effects of the Spanish Riders’ Law in 2021, which establishes the presumption of dependent employment for food delivery couriers, known as riders. Heterogeneous riders trade off work flexibility and easier employability as self-employed against higher hourly wages as employees. We find that the reform failed in fully absorbing the large outflows from self-employment or in increasing wages. However, complementing the reform with a payroll tax cut for complier platforms preserves riders’ welfare levels.