GDP estimation for Barcelona and the Barcelona Metropolitan Area. Methodological improvement in the estimation of productivity dynamics with wage information

The Gross Domestic Product (GDP) is the most important macroeconomic magnitude of the economic accounting of a territory. In spite of its known limitations, it is a basic magnitude in knowing the sectoral structure of an economy; furthermore, its evolution is the indicator that best measures economic dynamics. The relevance of GDP is not limited to the knowledge of country or regional economies, but it is also key to the knowledge of local and metropolitan economies. In the case of Barcelona, the estimates made by the Technical Planning Office (GTP) of the Barcelona City Council available up to now start from the calculation for the base year 2011, calculating the values of the following years assuming that the effect of the agglomeration economies (characteristics of urban areas) does not vary from year to year. The availability of wages data from Barcelona, the Barcelona Metropolitan Area (AMB) and Catalonia from the Continuous Sample of Labour Lives (MCVL) allows us to relax this assumption, opening up the possibility of a methodological improvement in which the effect of agglomeration is picked up by the wage differentials between sectors and territorial areas registered every year. The aim of this paper is, therefore, to methodologically improve the calculation of the GDP of Barcelona and the AMB with the introduction of information on wage levels as indicators of productivity. The results achieved with this methodological improvement show a high correlation with the data so far prepared by the GTP, both for Barcelona and for the AMB, so that the methodology used here is validated. The implication of these results is quite significant: the wage differentials between territorial areas would be reflecting differences in the levels of productivity. To our understanding, these are very relevant results that may be of considerable interest for urban economic statistics, as they allow a more up-to-date estimate of municipal GDP (with an annual frequency) and with a significant degree of reliability.