Does university performance have an economic payoff for home regions? Evidence for the Spanish provinces

Abstract

This paper analyses the impact of the university system performance on labour productivity growth for Spanish provinces during the period 2009–2016, showing a general positive link. These results enrich the debate on the economic spillovers of universities on their home regions. More specifically, we explore whether better managerial practices, which translate into more efficient organisations, have an economic effect on the territory. We decompose the effect into efficiency changes (approximations to the frontier) and changes due to technical progress (shifts of the frontier). Our results suggest that this impact is mostly driven by shifts in the frontier. However, the effect is only significant for provinces with productivity levels above the median. Therefore, our study suggests that the relative underperformance of the Spanish university system could be one of the factors slowing down the convergence path of Spanish provinces.