a b s t r a c tThis paper studies the evolution of Spanish regional inequality from 1860 to 1930. The results point to the coexistence of two basic forces behind changes in regional economic inequality: industrial specialization and labor productivity differentials. The initial expan sion of industrialization, in a context of growing economic integration of regions, promoted the spatial concentration of manufacturing in certain regions, which also benefited from the greatest advances in terms of labor productivity. Since 1900, the diffusion of manufac turing production to a greater number of locations has generated the emulation of produc tion structures and a process of catching up in labor productivity and wages.

This paper presents a new regional database on real wages for Spain from 1850 to 1930. This evidence is used to analyze the evolution of wages across regions and occupations. Sub stantial wage convergence occurred from 1850 to 1914, despite low rates of internal migration. World War I and the subsequent globalization backlash were associated with a spectacular in crease in wage differentials. However, real wage convergence across Spanish provinces re sumed during the 1920s, this time accompanied by high rates of internal migration.

Spain provides an opportunity to study the causes of regional differences in industrial development over the nineteenth century. As transportation costs decreased and barriers to domestic trade were eliminated, Spanish manufacturing became increasingly concentrated in a few regions. This article combines Heckscher-Ohlin and economic-geography frameworks and finds that comparative-advantage and increasing-return effects were economically very significant and practically explained all differences in industrialization levels across regions. The deficits of some regions in terms of industrialization appear to have been largely attributable to their factor endowments and the absence of home-market effects for modern industries.

Between 1850 and 2000, Spain's real income increased by about 40-fold, at an average rate of 2.5 percent. The sources of this long-run growth are investigated using Jorgenson-type growth accounting analysis. We find that growth upsurges are closely related to increases in TFP. Spanish economic growth went through three successive phases. The century before 1950 was characterized by slow growth driven by factor accumulation. TFP improvements pushed up explosive growth during the Golden Age and mitigated the deceleration during the transition to democracy years . Since the accession to the European Union Spain has experienced a dramatic productivity slowdown. Keywords AbstractBetween 1850 and 2000, Spain's real income increased by about 40-fold, at an average rate of 2.5 percent. The sources of this long-run growth are investigated using Jorgenson-type growth accounting analysis. We find that growth upsurges are closely related to increases in TFP. Spanish economic growth went through three successive phases. The century before 1950 was characterized by slow growth driven by factor accumulation. TFP improvements pushed up explosive growth during the Golden Age and mitigated the deceleration during the transition to democracy years . Since the accession to the European Union Spain has experienced a dramatic productivity slowdown.