Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain

Gómez-Antonio, Miguel and Bernard Fingleton ()
Authors registered in the RePEc Author Service: Miguel Gómez-Antonio

No 2011-05, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: In this paper we examine whether variations in the level of public capital across Spain‟s Provinces affected productivity levels over the period 1996-2005. The analysis is motivated by contemporary urban economics theory, involving a production function for the competitive sector of the economy („industry‟) which includes the level of composite services derived from „service‟ firms under monopolistic competition. The outcome is potentially increasing returns to scale resulting from pecuniary externalities deriving from internal increasing returns in the monopolistic competition sector. We extend the production function by also making (log) labour efficiency a function of (log) total public capital stock and (log) human capital stock, leading to a simple and empirically tractable reduced form linking productivity level to density of employment, human capital and public capital stock. The model is further extended to include technological externalities or spillovers across provinces. Using panel data methodology, we find significant elasticities for total capital stock and for human capital stock, and a significant impact for employment density. The finding that the effect of public capital is significantly different from zero, indicating that it has a direct effect even after controlling for employment density, is contrary to some of the earlier research findings which leave the question of the impact of public capital unresolved.

Keywords: Public capital; urban economics; spatial econometrics (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-eff, nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain (2012)
Working Paper: Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain (2011)
Working Paper: Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:sirdps:247

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