Determinants of labour productivity growth in Spanish and Portuguese regions: a spatial shift-share approach

This article analyses the structural changes in labour productivity in the regions of Spain and Portugal during the period 2000-2015, by business sector contribution and spatial distribution. A shift-share empirical analysis was applied to identify the components of aggregate productivity growth and to ascertain the role played by the different sectors. Both the intra-sectoral component and the presence of spatial autocorrelation were found to be statistically significant, which led us to identify two clusters: one of high productivity, corresponding to regions in the eastern half of the Iberian peninsula, and the other of low productivity, in the west. For both clusters, various model specifications that have been proposed in spatial econometrics literature were used to estimate spatial spillovers of each sector and determine the contribution made to productivity growth by each sectoral component, and to identify any spatial feedbacks that may be generated in this process. The total effect of intra-sectoral component for all sectors in both clusters is positive. The highest values are obtained by the agriculture, construction, trade and public services sectors. Moreover, the total effects are greater in the high-productivity cluster, except for the industry sector.