Local Employment Growth Patterns and the Great Recession: The Case of Spain

Abstract

The 2008 financial and economic crisis has led to widespread destruction of employment in Spain. Using municipality data, I examine employment growth differences between urban cores, urban hinterlands, and rural areas during the pre‐crisis period and the recession period. The data show that patterns of growth and decline have been very uneven across different types of areas. While in the boom years, hinterlands and rural areas experienced higher growth, urban core areas have done better during the recession years. I then test three strands of explanations for local growth differences: (i) the role of the local sectoral composition, (ii) the role of human capital, and (iii) the role of access to urban core areas. Estimations for employment growth in the two periods show that the crisis has altered some of the drivers of local employment growth and that human capital has been a key determinant of local resilience during the Great Recession.