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Agglomeration and labour productivity in Spain over the long term

Abstract

This paper analyses the relationship between spatial density of economic activity and interregional differences in the productivity of industrial labour in Spain during the period 1860–1999. In the spirit of Ciccone and Hall (Am Econ Rev 86:54–70, 1996) and Ciccone (Eur Econ Rev 46:213–227, 2002), we analyse the evolution of this relationship over the long term in Spain. Using data on the period 1860–1999 we show the existence of an agglomeration effect linking the density of economic activity with labour productivity in the industry. This effect was present since the beginning of the industrialisation process in the middle of the nineteenth century but has been decreasing over time. Our results show that doubling employment density raises average labour productivity in the industrial sector by between 3 and 5% in all periods analysed, with the exception of the last segment from the twentieth century. Hence, we find significant evidence of agglomeration effects. However, these effects seem to have been falling sharply from the mid-nineteenth century until late in the twentieth century, and there appears to be no positive evidence of agglomeration effects in industry in the period 1985–1999. This result could be explained by an important increase in the congestion effects in large industrial metropolitan areas that would have compensated the centripetal or agglomeration forces at work. Furthermore, this result is also consistent with the evidence of a dispersion of industrial activity in Spain during the last decades.

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Notes

  1. 1.

    Recent surveys of theoretical work in the field can be found in Fujita et al. (1999) and in Ottaviano and Thisse (2004).

  2. 2.

    A good summary of the empirical applications of this literature can be found in Head and Mayer (2004).

  3. 3.

    The emergence of sharp regional disparities during the early stages of development has been addressed by Williamson (1965).

  4. 4.

    Puga (1999) formalises this inverted-U relationship in a model in which both interregional migration and input–output linkages may drive agglomeration. The lack of mobility allows for interregional wage differences that act as a dispersion force.

  5. 5.

    A specific analysis of the factors determining the rise in the geographical concentration of industry during this period can be found in Tirado, Paluzie and Pons (2002).

  6. 6.

    This model is a variant of the one proposed by Ciccone and Hall (1996), which used a more flexible equation for estimation.

  7. 7.

    A recent application of this method to estimate Spanish GDP by provinces can be found in Martínez-Galarraga (2007).

  8. 8.

    Martínez-Galarraga (2007) gives detailed information on the construction of industrial wages by province using these sources.

  9. 9.

    “Jornales de los obreros de la construcción de carreteras durante el año 1860 en reales de vellón”, Madrazo (1984), p. 208.

  10. 10.

    “Jornales fabriles en las capitales de provincia (pesetas) en 1896–1897”, Sánchez-Alonso (1995), pp. 294–295. The original source is Instituto Geográfico y Estadístico (1903), pp. XLVII-XLIX.

  11. 11.

    Silvestre (2003), pp. 341–342. For 1930, the hourly wages in 1925 are used, because for subsequent years the average cannot be weighted among occupations since no data are available on the active population in each one. Original data come from Estadísticas de los Salarios y Jornadas de Trabajo, Ministerio de Trabajo (1927).

  12. 12.

    The information provided by the BBVA on manufacturing GVA begins in 1955. However, relevant data for the decade 1955–1964 have not been used in this study because the information for other factors (such as human capital stock) is not available for that period.

  13. 13.

    The sole exception is the falling disparity for the period 1914–1930, when density is estimated based on the working-age population. The reason for this difference could be related to significant changes, which were made to the criteria used to record occupations between the census of 1910 and subsequent ones.

  14. 14.

    As in Table A1, provinces that held positions at the top or the bottom of the ranking, respectively, during three or more of the analysed time periods appear in bold. Provinces appear in bold and cursive if they held such positions both before and after the Civil War. If a province only appeared twice in either of the two rankings, its name is printed in cursive. If it appeared only once then normal lettering is used.

  15. 15.

    In the text we do not give the maps on the spatial variation of the density indicator based on industrial employment per square kilometre. They are available to any reader upon request.

  16. 16.

    In particular, the variable used in the diagram to approximate regional density of industrial activity is GVA per square kilometre. The resulting picture matches the picture that would be obtained using the alternative variable instead: employee per square kilometre in the industrial sector. In fact, this alternative variable is used in the empirical analysis in the next section.

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Correspondence to Daniel A. Tirado-Fabregat.

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Martínez-Galarraga, J., Paluzie, E., Pons, J. et al. Agglomeration and labour productivity in Spain over the long term. Cliometrica 2, 195 (2008). https://doi.org/10.1007/s11698-007-0017-1

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Keywords

  • Agglomeration economies
  • Regional disparities
  • Spanish economic history

JEL Classification

  • R1
  • O4
  • N12