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Agglomeration and labour productivity in Spanish industry: a long-term analysis

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  • Julio Martinez Galarraga
  • Elisenda Paluzie Hernandez
  • Jordi Pons Novell
  • Daniel Aurelio Tirado Fabregat

    (Universitat de Barcelona)

Abstract

This paper analyzes 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 (1996) and Ciccone (2002), we analyze 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 industrialization process in the middle of the 19th century but has been decreasing over time. The estimated elasticity of labour productivity with respect to employment density was close to 8% in the subperiod 1860-1900, reduces to a value of around 7% in the subperiod 1914-1930, to 4% in the subperiod 1965-1979 and becomes insignificant in the final subperiod 1985-1999. At the end of the period analyzed there is no evidence of the existence of net agglomeration effects in the industry. 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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Bibliographic Info

Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 175.

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Length: 29 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:bar:bedcje:2007175

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Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques. Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona. Spain.
Web page: http://www.ere.ub.es
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References

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  1. Nicholas Crafts & Abay Mulatu, 2005. "What explains the location of industry in Britain, 1871–1931?," Journal of Economic Geography, Oxford University Press, vol. 5(4), pages 499-518, August.
  2. Daniel A. Tirado & Elisenda Paluzie & Jordi Pons, 2002. "Economic integration and industrial location: the case of Spain before World War I," Journal of Economic Geography, Oxford University Press, vol. 2(3), pages 343-363, July.
  3. Head, Keith & Mayer, Thierry, 2004. "The empirics of agglomeration and trade," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 59, pages 2609-2669 Elsevier.
  4. Ciccone, Antonio, 2002. "Agglomeration effects in Europe," European Economic Review, Elsevier, vol. 46(2), pages 213-227, February.
  5. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  6. Combes, Pierre-Philippe & Overman, Henry G., 2004. "The spatial distribution of economic activities in the European Union," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 64, pages 2845-2909 Elsevier.
  7. Elisenda Paluzie & Jordi Pons & Daniel Tirado, 2001. "Regional Integration and Specialization Patterns in Spain," Regional Studies, Taylor & Francis Journals, vol. 35(4), pages 285-296.
  8. OTTAVIANO, Gianmarco & THISSE, Jacques-François, . "Agglomeration and economic geography," CORE Discussion Papers RP -1725, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Diego Puga, 1996. "The Rise and Fall of Regional Inequalities," CEP Discussion Papers dp0314, Centre for Economic Performance, LSE.
  10. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
  11. Frank Geary & Tom Stark, 2002. "Examining Ireland"s Post--famine Economic Growth Performance," Economic Journal, Royal Economic Society, vol. 112(482), pages 919-935, October.
  12. Antonio Ciccone & Robert E. Hall, 1996. "Productivity and the Density of Economic Activity," NBER Working Papers 4313, National Bureau of Economic Research, Inc.
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Cited by:
  1. Emmanuel Skoufias & Gladys Lopez-Acevedo, 2009. "Latin America - Determinants of Regional Welfare Disparities within Latin American Countries : Synthesis," World Bank Other Operational Studies 3048, The World Bank.

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