Market access, the skill premium and human capital in Spain (1860-1930)

Abstract

This paper explores the relationship between market access and human capital in the context of an industrializing economy, inthis case Spain between the late 19th and early 20th centuries. Specifically, we examine whether differences in regionalaccumulations of human capital could be related to market access. To do this, we empirically test the relationship betweeneducation variables and market access for Spanish provinces between 1860 and 1930. We then focus on the mechanism thatmay be mediating this relationship, that is, the skill premium. The results suggest that there were sizeable provincial differencesin the skill premium, the explanation for which would be that those provinces with the highest market access specialized morein skill‐intensive sectors in which higher wages were paid.