Productivity growth and its determinants in the Spanish provinces: Do within-regions differences matter?

We analyze in this paper the productivity growth of the Spanish provinces and its determinants during the period 1986-2006 in order to ascertain whether the heterogeneity in total factor productivity between regions is, as expected, higher than between provinces belonging to the same region. If this is the case, results from previous studies that used regional data can be applied to provinces without losing generality, and multi-province regions can be used as proper references for one province regions. Our analysis suggests, however, that previous studies that used regional variables may well be subject to specification errors. Moreover, our results suggests that, in order to understand better the productivity growth patterns in Spain, data at province level should be used, and, since this disaggregation is not available for all relevant variables, the private and public institutions that elaborate the traditional regional variables for the Spanish economy should make an effort in the future in order to disaggregate the actual regional variables into variables measured at the province level.