Spatial productivity spillovers across Spanish municipalities

Abstract

Whilst a great deal of e¤ort has been dedicated to identification of agglomeration effects on labour productivity, the measurement of spatial productivity spillovers is a question that has been addressed only occasionally along the New Economic Geography literature. We estimate agglomeration effects, nonetheless conditioned to the possible existence of spatial productivity spillovers across Spanish municipalities in year 2001. To this respect, we find that agglomeration effects are in the same order of magnitude than thoseencountered when measured in the standard way. Further, these agglomeration efects coexist with very strong spatial productivity spillovers in a close neighbourhood of 10 km. Finally, these spatial e¤ects are shown to quickly diminish as distance increases.IV estimation, elevation, spatial externalities, productivity, neighbourhood, Spain