Regional structure of wages and external economies in Spain

Esteban Sanroma and Raul Ramos

No 51, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: Regional data on wages for the Spanish economy show that workers who live in developed regions earn more than workers in other regions. Literature on external economies provides a possible explanation of why firms do not move from these regions to others where wages are lower. Previous studies for the Spanish case use aggregated sectoral data to explain in terms of external economies why average wages are different across regions. The original contribution of this paper consists of using individual data to detect the existence and nature of external economies as an explanatory cause of territorial wage differences. With this aim, we have used individual data from the EPF 1990-91 (INE). This information permits us to control the influence of individual and job characteristics on wages to, first, detect the existence of external economies and, second, to test alternative explanations of their presence. The empirical evidence obtained confirms the relevance of territorial external economies and their influence on wages, as a result of improvements in the productive efficiency of the firm. In concrete terms, the more relevant external economies are associated with the regional human capital stock and geographical productive specialisation.

JEL-codes: D62 J24 J31 R23 (search for similar items in EconPapers)
Pages: 53 pages
Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Regional structure of wages and external economies in Spain (1998)
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