Applied Spatial Analysis and Policy

, Volume 12, Issue 3, pp 647–696 | Cite as

An Empirical Analysis of Natural and Cyclical Unemployment at the Provincial Level in Spain

  • Jaime Cuéllar-Martín
  • Ángel L. Martín-RománEmail author
  • Alfonso Moral


Differences in regional unemployment rates, as well as their formation mechanism and persistence, have given rise to many papers in recent decades. The present work contributes to this strand of literature from two different perspectives. In the first part of our work, we follow the methodological proposal put forward by Hofler and Murphy (1989) and Aysun et al. (2014). We use a stochastic cost frontier to break down actual Spanish provincial unemployment (NUTS-3) into two different estimation components: the first associated with aggregate supply side factors, and the other more related to aggregate demand side factors. The second part of our research analyses the existence of spatial dependence patterns among Spanish provinces in actual unemployment and in the two above-mentioned components. The decomposition carried out in the first part of our research tells us what margin policymakers have when dealing with unemployment reductions by means of aggregate supply and aggregate demand policies. Finally, spatial analysis of unemployment rates in Spanish provinces may also have significant implications from the standpoint of economic policy since we find common formation patterns or clusters of unemployment.


Unemployment Local labour markets Spatial dependence 

JEL Classification

E24 J64 R11 



The authors are grateful to Roberto Bande, Hector Sala, and Enrique López-Bazo as well as to participants at the XLII Reunión de Estudios Regionales, the XII Jornadas de Economía Laboral, and the 57th ERSA Congress for their comments to an earlier draft. The first and second authors were partially supported by the Spanish Ministry of Economy, Industry and Competitiveness under project ECO2017-82227-P. The third author has been partially supported by Ministry of Economy, Industry and Competitiveness under project CSO2015-69439-R.


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Authors and Affiliations

  1. 1.Department of Economic AnalysisUniversity of ValladolidValladolidSpain

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