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Employment and public capital in spain
Raurich, Xavier; Sala, Hèctor; Sorolla Amat, Valeri
Universitat Autònoma de Barcelona. Departament d'Economia Aplicada
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.
Treball -- Espanya
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Working Paper
Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia Aplicada); 0204-1

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