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Employment and public capital in Spain

Author

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  • Xavier Raurich
  • Hector Sala
  • Valeri Sorolla

Abstract

This 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

Suggested Citation

  • Xavier Raurich & Hector Sala & Valeri Sorolla, "undated". "Employment and public capital in Spain," Working Papers 2001-21, FEDEA.
    • Handle: RePEc:fda:fdaddt:2001-21
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    14. repec:crs:wpaper:9645 is not listed on IDEAS
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    Cited by:

    1. Xavier Raurich & Hector Sala & Valeri Sorolla, 2009. "Labour market effects of public capital stock: evidence for the Spanish private sector," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(1), pages 1-18.
    2. Samuel Bentolila & Juan F. Jimeno, "undated". "La reforma de la negociación colectiva en España," Working Papers 2002-03, FEDEA.
    3. Juan F. Jimeno, "undated". "Demografía, empleo, salarios y pensiones," Working Papers 2002-04, FEDEA.
    4. Hector Sala, 2009. "Institutions, capital stock and wage setting in Spain," Applied Economics, Taylor & Francis Journals, vol. 41(6), pages 779-789.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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