Labour market adjustment in the Spanish regions: a first examination to the immigration shock, 1995-2002
We investigate the effects of an immigration shock, which is still on course, in the productive structure of Spanish regions in a Heckscher-Ohlin framework. Immigration alters relative factor endowment composition across Spanish regions. The persistence of rigidities in the regional labour markets conditions the absorption of this labour supply shock and gives the clues to understand and anticipate future changes in regional labour markets. Moreover, we test the extent of production techniques homogeneity across regions and industries. We provide evidence that immigration had no perverse effects on regional labour markets over the period 1995-2002. Firstly, a large proportion of the observed changes came from a generalised skill biased technological change that decreases primary educated employment. Secondly, there is evidence that supports the existence of a Rybczynksi effect in the factor mix-output mix relationship. Finally, our findings also support the existence of factor price equalisation across Spanish regions.
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