Inequality for Wage Earners and Self-Employed: Evidence from Panel Data
AbstractIn this paper we study the evolution of income inequality for employees and self-employed workers. We highlight the importance of separately analyzing these different sources of income to gain a broader understanding of inequality. Using Spanish panel data on income and consumption from the ECPF for the period 1987-96, we decompose the variance of income shocks into a permanent and a transitory component. We find that there are noticeable differences in the evolution of income inequality, as well as in the relative importance of the permanent and transitory components across these groups. Our results point that the evolution of inequality can be basically explained by movements in the variance of the transitory component of income for the self-employed, while for the employees it is mainly driven by the variance of the permanent component, specially at the end of the period. Given these disparities, it seems that these two sources of income should be studied separately and that different policies are suitable for each group.
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Bibliographic InfoPaper provided by Banco de EspaÃ±a in its series Banco de EspaÃ±a Working Papers with number 0734.
Length: 48 pages
Date of creation: Oct 2007
Date of revision:
Permanent income inequality; transitory income inequality; consumption; selfemployment; panel data;
Other versions of this item:
- Pedro Albarran & Raquel Carrasco & Maite Martinez-Granado, 2009. "Inequality for Wage Earners and Self-Employed: Evidence from Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(4), pages 491-518, 08.
- Albarrán, Pedro & Carrasco, Raquel & Martínez Granado, María Teresa, 2007. "Inequality for Wage Earners and Self-Employed: Evidence from Panel Data," DFAEII Working Papers 2007-02, University of the Basque Country - Department of Foundations of Economic Analysis II.
- Pedro Albarran & Raquel Carrasco & Maite Martinez Granado, 2007. "Inequality for wage earners and self-employed : evidence from panel data," Economics Working Papers we072414, Universidad Carlos III, Departamento de Economía.
- Albarrán, Pedro & Carrasco, Raquel & Martinez-Granado, Maite, 2009. "Inequality for wage earners and self-employed : evidence from panel data," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4684, Universidad Carlos III de Madrid.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-ENT-2007-10-27 (Entrepreneurship)
- NEP-LAB-2007-10-27 (Labour Economics)
- NEP-MAC-2007-10-27 (Macroeconomics)
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