Abstract
This paper analyzes, for the period 1995-2001, wage differentials and the economic factors behind them across the Spanish provinces using several complementary techniques, mainly spatial econometrics. The results we obtain show that: a) These differentials are not very large and, although declining, they will persist in the future; b) The ranking among the Spanish provinces is very stable over time; c) In explaining wage differentials geographic location matters, since each province tends to experience similar wages to its neighbors; d) The main economic factor behind these differences is the discrepancy in the productivity of labor; and e) There is a negligible link between unemployment rates and wage levels.
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