Industrial Employment Growth in Spanish Regions - the Role Played by Size, Innovation, and Spatial Aspects

Abstract

The article analyses the role played by size and innovation in the growth of industrial employment in Spain during the period 1998-2002. The analysis is conducted using two different approaches: first of all, it studies the relationship, for seventeen Spanish regions, between industrial employment growth and the share of small firms and the presence of high and medium-high technological industries, following Camagni and Capello methodology. Secondly, it uses microdata, at firm level, in order to estimate the significance of size and innovation in the employment growth of those firms, also including regional variables for better explain the changes in employment. The results at regional level for the Spanish case show that there is no a relationship between industrial employment growth and the share of small firms and technological development of the regions. Similar results are obtained estimating a Heckman model using microdata. Independently of the definition of employment used, Gibrat´s law is accepted, showing that size is not a significant variable in order to explain the growth of firms. On the contrary, innovation, specially process innovation, plays an important role in the survival and growth behaviour. The regional variables are not significant, exception made of the share of industry in total employment of regions: the bigger the industrial sector, the higher the growth of employment at firm level.