Income distribution and housing affordability in Poland and in Spain

The objective of this paper is to evaluate the income inequality, income distribution but also housing affordability in Poland and in Spain between 2004 and 2012. Although the general equilibrium models do not always hold, the simple partial-equilibrium models suggest that income increases at the higher end of income distribution (the 10th decile) can raise housing prices offered for the lower end of this distribution (the 1st decile). The research consists of analysis of income distribution and housing affordability and afterwards its broad and in deep compare. The structure of this comparison is divided into two levels: national and regional (two homogeneous regions, one in each country). A standard Kakawani decomposition model based on the Gini index is used for the empirical research and the data is provided by Eurostat - the EU-SILC database in the form of annual equivalised gross income and equivalised disposable income.Income inequality in Poland decreased by roughly 15% as a result of redistributive effect of social benefits and taxes. And, the impact of this redistributive effect on housing allocation was the decrease of inequality of 14,7% for property owners with no outstanding mortgage neither housing loans, 11% for property owners with outstanding mortgage (the ownership rate exceeded 82% in 2012 indeed) and 3% for tenants paying reduced rent. However, for the group of tenants paying the market price rent the inequality in fact increased by roughly 3%. Bearing in mind that Poland and Spain have passed the parallel pathways by experiencing economic and social changes and so far Spain was the model for economic and system transition. Could it be also a model for income distribution and housing affordability?