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High European equilibrium unemployment is the most important economic development in the last fifteen years. Macroeconomists have put a lot of effort into trying to explain it. The studies made for the first Chelwood Gate conference, collected in the book The Rise in Unemployment, analysed the roles of real wages and demand contraction in the increase of unemployment after 1973, but then the persistence of high unemployment over time became the main issue. This task was picked up by the second Chelwood Gate conference, which studied the role of capital constraints and insider wage setting in generating persistence. Among the common findings across countries in the latter conference, as summarised by. Dreze (1990), was that employment was consistently and significantly below the minimum of labour supply, classical and keynesian employment.

Deficient matching between labour supply and demand became a natural suspect for this finding, and so the first steps are being taken, for example in several chapters of this book, in developing a theory of mismatch. At the same time, it is useful to provide empirical evidence on the various dimensions of mismatch, at the very least to find out which are more relevant for each country. This paper is devoted to the latter task for. the case of Spain.