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A spatial panel wage curve for Spain

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Abstract

Most empirical studies on the Spanish wage curve have ignored the possible spatial interaction effects between the regions. This paper reconsiders the Spanish wage curve using more recent data than previous studies and taking into account the role of regional spillovers. From a methodological perspective, we apply the two-step procedure proposed by Bell et al. (2002) to estimate a dynamic wage curve with spatial spillovers. In a first stage, we use microdata from the Spanish Social Security Records (Muestra Continua de Vidas Laborales) to obtain composition-corrected wages that are used in a second stage to estimate a wage curve over the period 2000–2010 allowing for spatial effects of unemployment across regions. Opposite to previous studies, we find that the wage equation is highly autoregressive and that regional spillovers are relevant to explain the relationship between unemployment and wages in the Spanish provinces.

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Notes

  1. Although the spatial weight matrix is usually denoted by \(W\), here and in order to avoid confusion with wages, we follow the notation by Kelejian and Robinson (1997) and the spatial weight matrix is denoted by \(M\).

  2. The great-circle distance is the shortest distance between any two points on the surface of a sphere and it has been computed using STATA’s globdist command.

  3. Latitude and longitude data for capital cities of the Spanish provinces have been obtained from the Instituto Geográfico Nacional (http://www.ign.es/ign/es/IGN/BBDD_GRAVIMETRICO.jsp).

  4. The results are robust to different specifications of the matrix such as the inverse of the distance to the square. The detailed results are available from the authors on request.

  5. We have applied STATA procedures for the estimation of spatial panel data models and dynamic spatial panel data models implemented by Belotti, Hughes and Mortari (xsmle version 1.4 17 March 2013) and by Shehata and Mickaiel (2012 and 2013). (spglsxt 9 December 2012 and spregdhp, 21 March 2013).

    http://ideas.repec.org/c/boc/bocode/s457610.html

    http://ideas.repec.org/c/boc/bocode/s457421.html

    http://ideas.repec.org/c/boc/bocode/s457505.html

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Authors and Affiliations

  1. AQR-IREA, Universitat de Barcelona, Barcelona, Spain

    Raul Ramos

  2. CHESO and Department of Economics, University of Oxford, Oxford, UK

    Catia Nicodemo

  3. IEB, Universitat de Barcelona, Barcelona, Spain

    Esteve Sanromá

Authors
  1. Raul Ramos
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  2. Catia Nicodemo
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  3. Esteve Sanromá
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Corresponding author

Correspondence to Raul Ramos.

Additional information

The research leading to these results has received funding from the European Community’s Seventh Framework Programme (FP7/2010-2.2-1) under grant agreement n\(^{\circ }\) 266834.

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Ramos, R., Nicodemo, C. & Sanromá, E. A spatial panel wage curve for Spain. Lett Spat Resour Sci 8, 125–139 (2015). https://doi.org/10.1007/s12076-014-0118-y

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