Structural components of income growth: an application to the evolution of the Spanish economy, 1980–2014

Abstract

This paper analyses the structural and technical changes in Spain since the 1980s, using annual input–output tables. Specifically, a differential structural decomposition analysis (SDA) is applied to shifts in value-added, revealing eight different components and allowing the estimation of the impacts of technical change on the process of economic transformation on a sector-by-sector basis. We conclude that growth in the Spanish economy in recent decades was a mix of technological modernization and general economic expansion, although with some heterogeneity among sectors over time. High-technology services played a key role in modernization in the late 1980s and 1990s. In fact, the growth of High-technology, Medium-high-technology, Energy and Construction sectors accelerated through the 2008 crisis. Labour compensation and returns from capital followed different trends both during expansions and recessions, intensifying income inequality in Spain.

KEYWORDS:

• Structural decomposition analysis
• input–output analysis
• Spanish economy
• productivity
• technology

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 See Carter (1970), Blair and Wyckoff (1989), Skolka (1989), and Oosterhaven and van der Linden (1997), among others, for the foundations and applications of the SDA approach.

2 As defined here, capital payments are the difference between gross VA and labour compensation, so the difference is the sum of the net operating surplus, depreciation of fixed capital, and net taxes on output.

3 We can see below the decomposition from Equation 4, but showing its five independent components, which are related to w, a, k, Ω and y.

$\begin{array}{l}\text{d}\mathbf{\text{v}}=[\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}}{[\mathbf{\text{I}}-\mathbf{\Omega }(\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}})]}^{-\mathbf{\text{1}}}\mathbf{\Omega }]\text{d}\widehat{\mathbf{\text{w}}}\widehat{\mathbf{\text{a}}x}+[\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}}{[\mathbf{\text{I}}-\mathbf{\Omega }(\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}})]}^{\mathbf{\text{-}}1}\mathbf{\Omega }]\widehat{\mathbf{\text{w}}}\text{d}\widehat{\mathbf{\text{a}}}\mathbf{\text{x}}\\ +[\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}}{[\mathbf{\text{I}}-\mathbf{\Omega }(\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}})]}^{\mathbf{\text{-}}1}\mathbf{\Omega }]\text{d}\widehat{\mathbf{\text{k}}}\mathbf{\text{x}}+\widehat{\mathbf{\text{c}}}[\mathbf{\text{I}}-\mathbf{\Omega }(\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}}){]}^{\mathbf{\text{-}}1}\text{d}\mathbf{\Omega }(\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}})\mathbf{\text{x}}+\widehat{\mathbf{\text{c}}}[\mathbf{\text{I}}-\mathbf{\Omega }(\mathbf{\text{I}}-\widehat{\mathbf{\text{c}}}){]}^{\mathbf{\text{-}}1}\text{d}\widehat{\mathbf{\text{y}}}\mathbf{\text{e}}\end{array}$

Additional information

Funding

This paper has been partially supported by project PID2019-106822RB-I00 from Agencia Estatal de Investigación (Spain). Ministerio de Ciencia e Innovación.