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Spain Is Different: Falling Trends Of Inequeality

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  • Josep Pijoan-Mas

    ()
    (CEMFI, Centro de Estudios Monetarios y Financieros)

  • Virginia Sánchez-Marcos

    ()
    (Universidad de Cantabria)

Abstract

In this article we characterize the evolution of inequality in hourly wages, hours of work, labor earnings, household disposable income and household consumption for Spain between 1985 and 2000. We look at both the Encuesta Continua de Presupuestos Familiares and the European Household Community Panel. Our analysis shows that inequality in individual net labor earnings and household net disposable income has decreased substantially. The decreases in the tertiary education premium and in the unemployment rate have been key ingredients to understand this falling trend. However, the inequality reduction has not been monotonic over the period: while it fell in years of economic expansion, there was an inequality surge in the recession of the early nineties. Public transfers have played a crucial role in smoothing out the inequality arising in the labor market, but instead the Spanish family does not seem to have been an important insurance mechanism. Regarding household consumption, inequality has fallen much less than inequality in household net disposable income, with the decrease mostly concentrated in the second half of the eighties. This suggests that the reduction in income inequality has affected the sources of permanent differences between households only during the second half of the eighties. Our estimates of the earnings process for the period are consistent with this view.

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Paper provided by CEMFI in its series Working Papers with number wp2009_0910.

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Date of creation: Sep 2009
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Handle: RePEc:cmf:wpaper:wp2009_0910

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Keywords: Wage inequality; income inequality; consumption inequality.;

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  1. 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.
  2. Pijoan-Mas, Josep & Sánchez-Marcos, Virginia, 2009. "Spain is Different: Falling Trends of Inequality," CEPR Discussion Papers 7489, C.E.P.R. Discussion Papers.
  3. Josep Pijoan-Mas, 2004. "Precautionary Savings or Working Longer Hours?," 2004 Meeting Papers 350, Society for Economic Dynamics.
  4. Bover, Olympia, 2008. "Wealth inequality and household structure: US vs. Spain," CEPR Discussion Papers 6680, C.E.P.R. Discussion Papers.
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  7. Manuel A. Hidalgo, 2008. "Wage Inequality in Spain, 1980-2000," Working Papers 08.08, Universidad Pablo de Olavide, Department of Economics.
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  12. José María Casado García, 2008. "From Income to Consumption: Measuring Households Partial Insurance," Working Papers 2008-09, FEDEA.
  13. John M. Abowd & David Card, 1986. "On the Covariance Structure of Earnings and Hours Changes," NBER Working Papers 1832, National Bureau of Economic Research, Inc.
  14. Orazio Attanasio & Hamish Low & Virginia Sánchez-Marcos, 2005. "Female Labor Supply As Insurance Against Idiosyncratic Risk," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 755-764, 04/05.
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Blog mentions

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  1. ¿Vale la pena estudiar? (VI) La inusual caída de la ganancia salarial resultante de la educación avanzada
    by Luis Garicano in Nada Es Gratis on 2010-12-08 23:30:40
  2. Desigualdad, educación y construcción
    by Cives in Politikon on 2012-04-26 14:49:41
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Cited by:
  1. Virginia Maestri & Andrea Roventini, 2012. "Inequality and Macroeconomic Factors: A Time-Series Analysis for a Set of OECD Countries," LEM Papers Series 2012/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  2. Pijoan-Mas, Josep & Sánchez-Marcos, Virginia, 2009. "Spain is Different: Falling Trends of Inequality," CEPR Discussion Papers 7489, C.E.P.R. Discussion Papers.
  3. Ada Ferrer-i-carbonell & X. Ramos & M. Oviedo, 2013. "GINI Country Report: Growing Inequalities and their Impacts in Spain," GINI Country Reports spain, AIAS, Amsterdam Institute for Advanced Labour Studies.
  4. Amy Beech & Rosetta Dollman & Richard Finlay & Gianni La Cava, 2014. "The Distribution of Household Spending in Australia," RBA Bulletin, Reserve Bank of Australia, pages 13-22, March.
  5. Manuel Hidalgo, 2009. "Are Within-Groups `Abilities' Distribution Constant on Time?," Working Papers 09.15, Universidad Pablo de Olavide, Department of Economics.
  6. Jeremy Lise & Nao Sudo & Michio Suzuki & Ken Yamada & Tomoaki Yamada, . "Wage, Income and Consumption Inequality in Japan, 1981-2008: from Boom to Lost Decades," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  7. Aitor Lacuesta & Sergio Puente & Ernesto Villanueva, 2011. "The schooling response to a sustained increase in low-skill wages: evidence from Spain 1989-2009," Banco de Espa�a Working Papers 1208, Banco de Espa�a.
  8. Raquel Carrasco & Juan F. Jimeno & A. Carolina Ortega, 2012. "Declining returns to skill and the distribution of wages : Spain 1995-2006," Economics Working Papers we1231, Universidad Carlos III, Departamento de Economía.
  9. Stéphane Bonhomme & Laura Hospido, 2012. "The Cycle Of Earnings Inequality: Evidence From Spanish Social Security Data," Working Papers wp2012_1209, CEMFI.
  10. Biavaschi, Costanza & Eichhorst, Werner & Giulietti, Corrado & Kendzia, Michael J. & Muravyev, Alexander & Pieters, Janneke & Rodríguez-Planas, Núria & Schmidl, Ricarda & Zimmermann, Klaus F., 2012. "Youth Unemployment and Vocational Training," IZA Discussion Papers 6890, Institute for the Study of Labor (IZA).
  11. Romain Ranciere & Nathaniel A. Throckmorton & Michael Kumhof & Claire Lebarz & Alexander W. Richter, 2012. "Income Inequality and Current Account Imbalances," IMF Working Papers 12/8, International Monetary Fund.
  12. Aitor Lacuesta & Sergio Puente & Pilar Cuadrado, 2009. "Omitted variables in the measure of a labour quality index: the case of Spain," Banco de Espa�a Working Papers 0835, Banco de Espa�a.
  13. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).
  14. Pablo D'Erasmo & Enrique G. Mendoza, 2013. "Distributional Incentives in an Equilibrium Model of Domestic Sovereign Default," NBER Working Papers 19477, National Bureau of Economic Research, Inc.
  15. Virginia Maestri & Roventini, A. (Andrea), 2012. "GINI DP 30: Stylized Facts on Business Cycles and Inequality," GINI Discussion Papers 30, AIAS, Amsterdam Institute for Advanced Labour Studies.
  16. Raquel Carrasco & Juan F. Jimeno & A. Carolina Ortega, 2011. "Accounting for changes in the Spanish wage distribution: the role of employment Composition effects," Banco de Espa�a Working Papers 1120, Banco de Espa�a.

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