The upswing of regional income inequality in Spain (1860–1930)

Abstract

a b s t r a c tThis paper studies the evolution of Spanish regional inequality from 1860 to 1930. The results point to the coexistence of two basic forces behind changes in regional economic inequality: industrial specialization and labor productivity differentials. The initial expan sion of industrialization, in a context of growing economic integration of regions, promoted the spatial concentration of manufacturing in certain regions, which also benefited from the greatest advances in terms of labor productivity. Since 1900, the diffusion of manufac turing production to a greater number of locations has generated the emulation of produc tion structures and a process of catching up in labor productivity and wages.

Why Did Spanish Regions Not Converge Before the Civil War? Agglomeration Economies and (Regional) Growth Revisited

“…As has been pointed out recently, the early stages of economic development in Spain took place alongside a strong increase in spatial inequality both as regards the location of industry across the territory (Paluzie et al 2004) and levels of GDP per capita for the Spanish regions (Rosés et al 2010). In the analysis of the causes of this increase in regional inequalities and its relation with the presence of agglomeration economies in the industrial sector, Martínez-Galarraga (2012) has shown that the marked industrial specialisation of a small number of Spanish provinces came about, among other factors, due to their market size in the presence of economies of scale that acted as an agglomeration force.…”

“…First of all it involves an economy that, because it was still in the early stages of economic development, was characterised by the presence of high transport costs (Herranz 2007;Prados de la Escosura and Rosés 2009). Also, all Spain's regions are at income levels clearly below the thresholds that would mark a change of trend in the relationship between agglomeration and growth (Rosés et al 2010). Within the framework of the industrialisation processes typical of the countries of central and southern Europe, economic growth in Spain over this period was led by advances in the industrial sector, in which various papers have shown the presence of agglomeration economies (Betrán 1999;Tirado et al 2002;Martínez-Galarraga et al 2008).…”

“…We therefore have 10-year intervals of time for the whole period between 1860 and 1930. following Ciccone and Hall (1996), have also shown the presence of a relationship between industrial regional employment density and labour productivity since the origins of industrialisation and modern growth in the second half of the 19 th century. Rosés et al (2010) and Martínez-Galarraga et al (2015) extend the analysis to the determinants of regional income inequality. Rosés et al (2010) shows that the Spanish regions that specialised in industrial production were those that achieved the highest levels of income during these years.…”

“…It is the first time that a paper has used estimates of provincial GDP for the second half of the 19 th century, which complete the data set presented in Rosés et al (2010) 2 . The reconstruction of regional GDP estimates for Spain is in line with the international literature that has recently provided historical estimations for different countries.…”

“…Besides, Martínez-Galarraga et al (2008), 2 Specifically, the new data, provincial nominal GDP at factor cost, is for 1870, 1880 and 1890. The estimates were made following the methodology used by Rosés et al (2010). See Appendix for a detailed description.…”