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Macroeconomic Conditions and the Distribution of Income in Spain

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  • Farré, Lídia

    ()
    (IAE Barcelona (CSIC))

  • Vella, Francis

    ()
    (Georgetown University)

Abstract

This paper analyzes the impact of changes in macroeconomic conditions on the income distribution in Spain. Using household data from the Encuesta Continuada de Presupuestos Familiares (ECPF) from 1985 to 1996, we disentangle the effect of aggregate variables on the income distribution by estimating counterfactual densities conditional on different macroeconomic scenarios. Our empirical approach allows for a flexible relationship between the income level and two constructed indices. The first index captures the influence of individual characteristics while the second captures the role of macroeconomic variables. The contribution of each of these variables to their respective indices is estimated by a semiparametric least squares procedure. We find that although inequality displays a decreasing trend over the earlier part of the period examined, the poor performance of the Spanish economy during the early 1990's appears to have reversed this trend. We also conclude that while inflation appears to have no impact on the distribution of income for the period examined, there were important redistributive roles for unemployment, government expenditure and the level of GDP.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2512.

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Length: 39 pages
Date of creation: Dec 2006
Date of revision:
Publication status: published in: Labour, 2008, 22 (3), 383-410
Handle: RePEc:iza:izadps:dp2512

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Keywords: aggregate fluctuations; semiparametric estimation; income distribution;

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  1. Dollar, David & Kraay, Aart, 2002. " Growth Is Good for the Poor," Journal of Economic Growth, Springer, Springer, vol. 7(3), pages 195-225, September.
  2. Castaneda, Ana & Diaz-Gimenez, Javier & Rios-Rull, Jose-Victor, 1998. "Exploring the income distribution business cycle dynamics," Journal of Monetary Economics, Elsevier, Elsevier, vol. 42(1), pages 93-130, June.
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Cited by:
  1. Jürgen Maurer, 2007. "Modelling socioeconomic and health determinants of health care use: A semiparametric approach," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 07145, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  2. Gonzalo Paz Pardo & José Manuel Sánchez Santos, 2014. "Household Debt and Consumption Inequality: The Spanish Case," Economies, MDPI, Open Access Journal, MDPI, Open Access Journal, vol. 2(3), pages 147-170, July.
  3. Salvatore Morelli, 2014. "Banking Crises in the US: the Response of Top Income Shares in a Historical Perspective," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 359, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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