Immigration and Productivity: A Spanish tale

Abstract

The problem of Spanish productivity is a recurrent topic in economic literature. The importance of identifying the sources of productivity is even more relevant in the current economic landscape, because the Spanish economy is passing through important adjustments, after going through an intense period of huge immigration inflows. This aims of this paper include assessing the evolution of Spanish productivity, by providing a quantitative evaluation of current results with reference to potential ones. Considerable focus is also placed on identifying the determinants of the productivity changes which have been incurred in recent years by focusing on the role of the entry of immigrants into the local labour market. In this way, our results show that, in a few specific situations, immigrants play the role of environment-builders, encouraging the transition of firm strategies fostering productivity from the cost reduction side to the hiring of skilled labour.