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

Bernard Fingleton (bf100@cam.ac.uk) and Miguel Gómez-Antonio (mga@ccee.ucm.es)
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Miguel Gómez-Antonio: Department of Public Finance and Fiscal System,Universidad Complutense de Madrid
Authors registered in the RePEc Author Service: Miguel Gómez-Antonio

No 1102, Working Papers from University of Strathclyde Business School, Department of Economics

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)
JEL-codes: C21 R11 R12 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2011-01
New Economics Papers: this item is included in nep-eff, nep-geo and nep-ure
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Citations: View citations in EconPapers (2)

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Related works:
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:str:wpaper:1102

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