Abstract
Since Spain’s democratic transition in 1977, Catalan politics have often clashed with the central government, with demands shifting from greater funding to outright secession. The conflict intensified after the 2010 Constitutional Court ruling on the Statute of Autonomy, leading to mass mobilizations, a non-binding consultation in 2014, and the unilateral independence referendum of October 2017, declared illegal under Spanish law. These events created significant uncertainty and prompted strong economic responses, including a large outflow of bank deposits and the relocation of over 10,000 firms’ headquarters out of Catalonia.
Building on previous research, this paper examines the impact of the independence declaration on firm dynamics using annual municipal data (2012–2024) from the DIRCE database. We estimate difference-in-differences models, with Catalan municipalities as the treatment group and the rest of Spain as the control group. Our results indicate that, after the declaration, Catalan municipalities experienced 1.1% lower growth in the number of firms, although no significant effects were found on employment. Robustness checks using neighboring regions, placebo regressions, and dynamic specifications confirm these findings.
Sectoral analysis reveals that the negative effect is concentrated in construction and in trade, transportation, accommodation, and food services, which together account for half of all firms but only one-third of employment. This helps explain why the reduction in firm growth did not translate into employment losses. A possible explanation is that many firms relocated their headquarters for legal certainty while continuing operations in Catalonia.
Building on previous research, this paper examines the impact of the independence declaration on firm dynamics using annual municipal data (2012–2024) from the DIRCE database. We estimate difference-in-differences models, with Catalan municipalities as the treatment group and the rest of Spain as the control group. Our results indicate that, after the declaration, Catalan municipalities experienced 1.1% lower growth in the number of firms, although no significant effects were found on employment. Robustness checks using neighboring regions, placebo regressions, and dynamic specifications confirm these findings.
Sectoral analysis reveals that the negative effect is concentrated in construction and in trade, transportation, accommodation, and food services, which together account for half of all firms but only one-third of employment. This helps explain why the reduction in firm growth did not translate into employment losses. A possible explanation is that many firms relocated their headquarters for legal certainty while continuing operations in Catalonia.