Does productivity change in the territory? A methodological proposal for the estimation of the GDP of Spanish cities

The Gross Domestic Product (GDP) is a key indicator in urban economics, as it is included in the methodological manuals on urban statistics both at the international (UN-Habitat) and European (Eurostat) levels. However, most Spanish cities do not have an estimate of GDP. In addition, some of the cities that do have a GDP estimate are poorly updated since they do not have an annual series and, if they are located in different regions (Autonomous Communities CCAA), the comparability of the results among them cannot be guaranteed. The aim of this work is to contribute to fill this information gap by presenting a methodology for GDP estimation at the city level based on the estimation of differential productivities by sector of the city with respect to its region. To this end, we use the information on differential salaries by sector between the cities and their regions, which for the period 2010-2016 can be estimated from the Continuous Sample of Labour Lives (in Spanish, Muestra Contínua de Vidas Laborales-MCVL). The GDP results thus estimated show values that seem to indicate that relevant aspects of the economy of the cities are being collected, such as, among others, potential economies of agglomeration. The application of the proposed methodology would mean moving from the situation described above to one in which, for more than a hundred of the most populated Spanish cities, a fully comparable GDP series from 2010 to 2016 could be available, with an annual update, and with a methodology that takes into account one of the most relevant features of an urban economy, such as the agglomeration effect.