Abstract
This paper examines employees? earnings inequality in Portugal for 1986-2017 using data from the Personnel Records database. Our objective is twofold: (a) characterize earnings inequality by comparing representative distributions, before and after the great crisis; and (b) investigate the role played by the business cycle on the behaviour of earnings inequality by estimating Autoregressive Distributed Lag (ADL) models. To identify trends and variations along the trend in earnings inequality we use cardinal measures and the coefficient of variation. We inspect the characteristics of earnings distributions in terms of moments (mean and median) and polarization (using relative distributions analysis). The main findings are: (1) earnings inequality shows a positive trend (except during the great crisis); (2) polarization is present in every year, with lower polarisation prevailing over upper polarization, both evolving at different paces (very fast 1989-2002; slower pace 2002-2008; negative growth 2008-2017); (3) the business cycle relationship with earnings inequality is negative.
Highlights
The behaviour of income inequality in Portugal since the late 1980s has been well documented by several authors
We present eight Autoregressive Distributed Lag (ADL) models (A1 to A8), where the first four models (A1 to A4) use the coefficient of variation (CV) to proxy earnings inequality and the remaining four (A5 to A8) use the Gini coefficient (g)
This sign indicates that earnings inequality increases when a recession deepens, which may be the consequence of the relative reduction in employment of workers with intermediate earnings, in accordance with the evidence we found on the existence of left polarization from the median
Summary
The behaviour of income inequality in Portugal since the late 1980s has been well documented by several authors. Carlos Farinha Rodrigues, Rita Figueiras, and Vítor Junqueira (2012) provide evidence of a decrease in income inequality during the 1970s, 1980s and 1990s. Over the 1999-2004 period, the decline is reversed but from 2004 until 2009 is again resumed. For a more recent period, 20042011, Jens M. Arnold and Rodrigues (2015) document the decrease in income inequality in the Portuguese economy patent in the decline of the Gini coefficient and the S90/S10 income decile share. The authors highlight the fact that the
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
