Abstract
This paper analyses the level of inequality in Spain and how it evolved over the course of the past crisis and the early stages of the current recovery. To this end, it first introduces the various dimensions of wage, income, consumption and wealth inequality, and studies how they have developed. The analysis shows less wage dispersion in Spain than in other comparable economies, even after the crisis years, while the surge in unemployment during the period resulted in a high level of inequality in per capita income. The level of inequality in Spain is more moderate when total gross household income is analysed, decreasing during the crisis as a result of pensions developing more favourably than other sources of income, in conjunction with young people delaying setting up home. Inequality in per capita consumption rose during the crisis, particularly as a result of a decrease in expenditure on consumer durables by low-income households. Wealth inequality exceeds income inequality and increased during the downturn as a result of financial assets outperforming real assets. Nevertheless, Spain’s wealth inequality is moderate by international standards, as ownership of real assets is more widespread than in other countries. The way inequality has evolved during the early stages of the current economic recovery shows that falling unemployment has enabled a reduction in wage income inequality, as well as in per capita income inequality, albeit to a lesser extent.
Highlights
Since the onset of the crisis, income inequality has increased in many OECD countries, including Spain
The inequality observed in this variable is analysed below, distinguishing between inequality stemming from differences in hourly wages and that stemming from differences in the number of hours worked
The analysis focuses in particular on the mechanisms driving up inequality in wage income and wealth, and on the various economic decisions and economic policy instruments that cushioned the increase in inequality during this period
Summary
Since the onset of the crisis, income inequality has increased in many OECD countries, including Spain. Despite the fact that the EFF allows researchers to do both an analysis at the individual and the household level, when analysing individual earnings, the paper extensively uses the microdata of the Spanish Structure of Earnings Survey (EES) This is the case because EES has more precise information on the effective hours worked allowing for a better estimation of hourly wage per worker. The paper uses the annual Spanish Labour Force Survey (EPA) wage data, converted to monthly frequency, for full-time employees; the monthly wages of workers working the whole week in the fiscal module of the Continuous Sample of Working Histories (MCVL) conducted by the Ministry of Employment and Social Security; and the European Union Statistics on Income and Living Conditions (EU-SILC) dataset, published by Eurostat, that allows a comparison of total and per capita income across different EU members, in both net and gross terms. All income that households decide not to consume are savings; households’ wealth will vary according to the assets in which they invest their savings, the price paid and the rate of return obtained
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