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Employment and Public Capital in Spain

Author

Listed:
  • Xavier Raurich
  • Hector Sala

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • Valeri Sorolla

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.

Suggested Citation

  • Xavier Raurich & Hector Sala & Valeri Sorolla, 2002. "Employment and Public Capital in Spain," Working Papers wp0204-1, Department of Applied Economics at Universitat Autonoma of Barcelona.
    • Handle: RePEc:uab:wprdea:wp0204-1
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    Cited by:

    1. Xavier Raurich & Hector Sala & Valeri Sorolla, 2009. "Labour market effects of public capital stock: evidence for the Spanish private sector," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(1), pages 1-18.
    2. Samuel Bentolila & Juan F. Jimeno, "undated". "La reforma de la negociación colectiva en España," Working Papers 2002-03, FEDEA.
    3. Hector Sala, 2009. "Institutions, capital stock and wage setting in Spain," Applied Economics, Taylor & Francis Journals, vol. 41(6), pages 779-789.
    4. Juan F. Jimeno, "undated". "Demografía, empleo, salarios y pensiones," Working Papers 2002-04, FEDEA.

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    More about this item

    Keywords

    employment; wage equation; public capital; economic growth.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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