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Regional structure of wages and external economies in Spain

Author

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  • Esteban Sanroma Melendez
  • Raul Ramos Lobo

    (Universitat de Barcelona)

Abstract

Regional data on wages for the Spanish economy show that workers who live in developed regions earn more than workers in other regions. Literature on external economies provides a possible explanation of why firms do not move from these regions to others where wages are lower. Previous studies for the Spanish case use aggregated sectoral data to explain in terms of external economies why average wages are different across regions. The original contribution of this paper consists of using individual data to detect the existence and nature of external economies as an explanatory cause of territorial wage differences. With this aim, we have used individual data from the EPF 1990-91 (INE). This information permits us to control the influence of individual and job characteristics on wages to, first, detect the existence of external economies and, second, to test alternative explanations of their presence. The empirical evidence obtained confirms the relevance of territorial external economies and their influence on wages, as a result of improvements in the productive efficiency of the firm. In concrete terms, the more relevant external economies are associated with the regional human capital stock and geographical productive specialisation.

Suggested Citation

  • Esteban Sanroma Melendez & Raul Ramos Lobo, 1999. "Regional structure of wages and external economies in Spain," Working Papers in Economics 51, Universitat de Barcelona. Espai de Recerca en Economia.
  • Handle: RePEc:bar:bedcje:199951
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Esteban Sanroma Melendez & Raul Ramos Lobo, 2001. "Capital humano local y productividad en las provincias espanolas," Working Papers in Economics 71, Universitat de Barcelona. Espai de Recerca en Economia.
    2. Esteban Sanroma & Raul Ramos, 2007. "Local Human Capital and Productivity: An Analysis for the Spanish Regions," Regional Studies, Taylor & Francis Journals, vol. 41(3), pages 349-359.
    3. Ramos, Raul & Sanroma, Esteban, 1999. "Local human capital and external economies: evidence for Spain," ERSA conference papers ersa99pa309, European Regional Science Association.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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