Productivity convergence and spatial dependence among Spanish regions

Abstract

This paper estimates the evolution of labor productivity disparities among 48 Spanish regions over 1980–1996 according to the concepts of β- and σ-convergence. The results of β-convergence emphasize the importance of including the impact of neighboring locations’ productivity and a disaggregate analysis at a sectoral level. In order to measure the narrowing of inequalities, we examine σ-convergence and reveal that convergence occurs in aggregate labor productivity but not in productivities per sector. The reason comes from a transfer of resources from agriculture towards more productive sectors that has been more pronounced in the poor regions than in the rich ones.