Raurich, Xavier; Sala, Hector; Sorolla, Valeri - In: International Review of Applied Economics 23 (2009) 1, pp. 1-18
This paper provides a new rationale for the positive effect of public capital stock on employment and wages. We show that higher levels of public capital reduce wages along the wage equation and enhance employment due to the resulting larger elasticity of labour demand with respect to wages. The...