Trade policy and wage gradients: evidence from a protectionist turn

Abstract

In the spirit of Hanson (1997), we analyze the existence of regional nominal wage gradients in Spain during the interwar period (1914-1930) and their transformation fol­lowing an important change in trade policy. However, our case study analyzes the effects of the substitution of an open economy by a closed one - exactly the reverse of the process studied by Hanson. We find strong evidence of the existence of a regional wage gradient centered on Barcelona, which weakened after 1922. In Spain during the interwar period protectionist policies appear to have favored the loss of centrality of the coastal location (Barcelona) and the relative rise of other locations