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I wonder if Spaniards used to stay up late before Franco changed their time zone in the 1940s. Does anybody know?

Yes, but the 1940's, and before, were different:[0]

""So you used to work in the morning at one job. Then it was necessary to stop to rest. And then there was another job in the late afternoon and evening — in order to earn enough money to survive," she says. "It's said to be the origin of our way of life now.""

[0] http://www.npr.org/blogs/parallels/2013/11/30/244995264/spai...

…also it appears there has been a 10 year campaign by an economist to change the clock in Spain;[0] an organisation [1], and progress (dependant on one's perspective) [2]

[0] http://www.theatlantic.com/international/archive/2013/03/wil...

[1] http://www.horariosenespana.es/

[2] http://www.bbc.co.uk/news/world-europe-24294157

That explanation isn't very convincing. People in other relatively poor countries didn't develop that distinctive pattern.

I don't think it matters if it's convincing or not.

I was answering the question, and the linked resource affirms it was.

they are still up late, because many people also have long working hours, as they are forced through the siesta lunch break

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