Spanish regions show varied labor productivity trends, Madrid leads
A Banco de España Occasional Paper analyzes labor productivity in Spanish regions from 2000 to 2022, highlighting the sustained leadership of a cluster comprising Madrid, the Balearic Islands, and the Canary Islands, driven by strong tertiarization.
Mapping Spain's regional productivity
The paper investigates the evolution of labor productivity across Spanish regions between 2000 and 2022, focusing on sectoral structure and productive specialization.
Researchers computed labor productivity as the ratio of gross value added at constant prices to effective hours worked, utilizing data from the National Statistics Institute (INE) and the Fundación de Estudios de Economía Aplicada (FEDEA).
Through cluster analysis, regions were grouped into five categories based on their relative productive specialization.
The findings consistently show the leadership of the cluster formed by Madrid, the Balearic Islands, and the Canary Islands, characterized by a strong service-sector orientation.
This cluster demonstrated robust performance throughout the analyzed period, underscoring the impact of tertiarization on regional economic dynamics.
The study also observed greater resilience in industrially oriented clusters during periods of economic crisis, contrasting with the service-led regions.
Spain's productivity paradox persists
The analysis contextualizes Spain's unique 'productivity paradox,' where labor productivity often stagnates during economic expansions and rises during recessions, a behavior that contrasts with other European economies.
Explanations for this countercyclical pattern include the significant weight of low-productivity sectors, such as construction and certain labor-intensive services, in Spain's growth model.
Institutional factors like labor market duality and the prevalence of small and medium-sized enterprises with limited innovative capacity also contribute.
The study divides the 2000–2022 period into four phases: two expansions (2000–2007 and 2014–2019) and two recessions (2008–2013 and 2020–2022), following FUNCAS criteria.
This periodization allows for a detailed assessment of regional productivity trends and sectoral dynamics under varying economic cycles, revealing the heterogeneous role of service subsectors in overall productivity dynamics.
Nuanced insights for regional policy
This paper offers crucial insights into Spain's regional economic disparities, particularly regarding the complex interplay of tertiarization and industrial resilience.
While the cluster analysis provides a clear framework, the study's finding that productivity dynamics do not always align with these groupings due to service subsector heterogeneity is particularly noteworthy.
Policymakers should consider these nuances to foster more balanced and sustainable regional growth strategies.