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How are the potential gains from economic activity transmitted to the labour factor: more employment or more wages? Evidence from the Portuguese context

Carlos Carreira () and Luís Lopes ()

Regional Science Policy & Practice, 2020, vol. 12, issue 2, 319-348

Abstract: The paper analyses the role of knowledge externalities in firms' employment and workers' wages. We test whether agglomeration economies and regional knowledge base exert a greater impact on wage growth than on employment growth, using spatial panel econometric techniques to control for unobserved spatial effects. Using a spatial panel for six Portuguese manufacturing industries, we found that regional knowledge spillovers, contrary to the theoretical assumptions, have a greater impact on employment in firms than on workers' wages. This analysis might enhance important policy debates about the effects of regional policies on employment and wages.

Date: 2020
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Handle: RePEc:bla:rgscpp:v:12:y:2020:i:2:p:319-348