Barriers to employment and welfare dynamics: Evidence from Spain

The main aim of this paper is to identify the effects of barriers to employment and other socio-economic characteristics on welfare duration taking Spain as reference. We tray to assess to what extent these personal problems might be a limit of recent strategies based on promoting work for welfare recipients. An attempt is made to answer two fundamental questions: are these barriers more relevant explaining longer spells in the programs than other characteristics? Secondly, how does the probability of exiting the programs vary as people remain for longer periods? The main determinants of durations are analysed using parametric models. The effects of unobserved heterogeneity are also estimated. The results show that employability and ethnicity are the key variables to explain the lengthening of welfare spells. Social problems add relevant qualitative elements to previous conclusions on welfare duration but the fit of the models improve by very little.