Employment and Public Capital in Spain
AbstractThis paper analyses the e¤ects 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 con…rms empirically this relationship. The results show that an increase in public capital has a significant and positive direct influence on employment, and indirect e¤ects derived from lower wages and higher economic growth. Finally, we undertake a simulation exercise to assess the long run efects on employment and economic growth of increasing public capital.
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Bibliographic InfoPaper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wp0204-1.
Length: 25 pages
Date of creation: Feb 2002
Date of revision:
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More information through EDIRC
employment; wage equation; public capital; economic growth.;
Find related papers by JEL classification:
- 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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