Dynamic modeling of interregional economic activity: An application to the Spanish labour market

This paper focuses on the dynamic relations between Spain's principal regional labor markets. An economic base mechanism, some of whose assumptions are redefined, is postulated as the essential behavior hypothesis. The bifurcation hypothesis is resolved having regard to the necessary condition of cointegration between the basic sector and the regional aggregate, using series with quarterly periodicity in this case. The identified bases, which need not coincide in each region, allow a dynamic inter-regional model to be built using vector autoregression with an error correction mechanism. The results are a step towards the spatial disaggregation of Spain's labor market and reveal singular dynamic relationships.