Employment and public capital in Spain
AbstractThis paper analyses the effects on employment of increasing the stock of public capital. To this end, we derive a wage equation so that wages are endogenized. This allows us to show that, by means of a higher elasticity of labour demand with respect to wages, a rise in public capital increases employment. The estimation of a structural model for the Spanish private sector tests and confirms empirically this relationship. The results show that an increase in public capital has a significant and positive direct influence on employment, and indirect effects derived from lower wages and higher economic growth. Finally, we undertake a simulation exercise to assess the long run effects on employment and economic growth of increasing public capital
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- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
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