Employment and Public Capital in Spain

Xavier Raurich, Hector Sala and Valeri Sorolla

Working Papers from Department of Applied Economics at Universitat Autonoma of Barcelona

Abstract: This paper analyses the e¤ects 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 con…rms empirically this relationship. The results show that an increase in public capital has a significant and positive direct influence on employment, and indirect e¤ects derived from lower wages and higher economic growth. Finally, we undertake a simulation exercise to assess the long run efects on employment and economic growth of increasing public capital.

Keywords: employment; wage equation; public capital; economic growth. (search for similar items in EconPapers)
JEL-codes: E24 J38 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2002-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Employment and public capital in Spain
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Persistent link: https://EconPapers.repec.org/RePEc:uab:wprdea:wp0204-1

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