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Macroeconomic Conditions and the Distribution of Income in Spain

Author

Listed:
  • Farré, Lídia

    () (University of Barcelona)

  • 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.

Suggested Citation

  • Farré, Lídia & Vella, Francis, 2006. "Macroeconomic Conditions and the Distribution of Income in Spain," IZA Discussion Papers 2512, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2512
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    References listed on IDEAS

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    1. Josep Oliver Alonso & Xavier Ramos & José Luis Raymond-Bara, 2001. "Recent trends in Spanish Income Distribution: A Robust Picture of Falling Income Inequality," Working Papers wp0107, Department of Applied Economics at Universitat Autonoma of Barcelona.
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    Citations

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    Cited by:

    1. Ismael Ahamdanech & Carmelo García-Pérez & Mercedes Prieto-Alaiz, 2020. "A Stochastic Dominance Approach to Evaluating Pro-Poor Growth—An Application to the Spanish Case," Sustainability, MDPI, Open Access Journal, vol. 12(5), pages 1-16, February.
    2. Jürgen Maurer, 2007. "Modelling socioeconomic and health determinants of health care use: A semiparametric approach," MEA discussion paper series 07145, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    3. Salvatore Morelli, 2018. "Banking crises in the US: the response of top income shares in a historical perspective," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 257-294, June.
    4. Salvatore Morelli, 2018. "Banking crises in the US: the response of top income shares in a historical perspective," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 257-294, June.
    5. Luis Ayala & Olga Cantó & Juan G. Rodríguez, 2017. "Poverty and the business cycle: A regional panel data analysis for Spain using alternative measures of unemployment," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 47-73, March.
    6. Gonzalo Paz Pardo & José Manuel Sánchez Santos, 2014. "Household Debt and Consumption Inequality: The Spanish Case," Economies, MDPI, Open Access Journal, vol. 2(3), pages 1-24, July.
    7. Jürgen Maurer, 2007. "Modelling socioeconomic and health determinants of health‐care use: a semiparametric approach," Health Economics, John Wiley & Sons, Ltd., vol. 16(9), pages 967-979, September.
    8. Salvatore Morelli, 2014. "Banking Crises in the US: the Response of Top Income Shares in a Historical Perspective," CSEF Working Papers 359, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

    More about this item

    Keywords

    aggregate fluctuations; semiparametric estimation; income distribution;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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