Employment and public capital in Spain
Xavier Raurich,
Hector Sala and
Valeri Sorolla
No 2001-21, Working Papers from FEDEA
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
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Working Paper: Employment and Public Capital in Spain (2002) 
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Persistent link: https://EconPapers.repec.org/RePEc:fda:fdaddt:2001-21
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