Tracing the evolution of agglomeration economies: Spain, 1860-1991

Abstract

This article attempts to quantify how the effect of agglomeration economies on population growth has evolved over time. Using district population in Spain between 1860 and 1991, recorded approximately every decade, this article examines whether initial population affects subsequent population growth. Our results show that, while the relationship between these two variables hardly existed during the second half of the 19th century, this link increased significantly between 1910 and 1970, although this trend was abruptly interrupted by the Civil War and the autarkic period that followed. The intensity of this relationship debilitated in the 1970s, a process that continued during the 1980s as rural out-migration diminished and de-industrialisation hit traditional manufacturing sectors. Our findings also stress that agglomeration economies were stronger in medium-size districts, especially from 1960 onwards, thus suggesting that congestion costs began to mitigate the benefits arising from agglomeration economies in the largest locations.