Earnings Inequality in Spain

Bonhomme, S., & Hospido, L. (2013). Earnings Inequality in Spain, Intereconomics, Review of European Economic Policy, Volume 48, Number 6, November/December

Summary and policy implications

The social security data show that male earnings inequality in Spain has varied considerably over the past two decades. However, this evolution presents distinctive features compared to other developed countries such as the US or Germany. Our evidence shows that there was no apparent trend in the evolution of earnings inequality in Spain, but rather marked countercyclical fluctuations. Moreover, in contrast with the US, the evolution of Spanish inequality during the expansion reflected an increase in demand for workers in the lower-middle part of the wage distribution, with relatively low education and high rates of temporality, as well as a demand increase for immigrant workers. Such demand has sharply fallen during the recent recession, with opposite effects on inequality.

The construction sector appears to have played a special role in the countercyclical evolution of male earnings inequality in Spain. The Spanish boom of the late 1990s and 2000s was also a housing boom. Parallel to this evolution, the relative employment of construction workers initially rose and subsequently fell during the housing bust. During the expansion, not only the employment but also the relative earnings of construction workers rose steadily, consistent with the implications of a positive demand shock in this particular sector. Overall, this evidence suggests that policies that fostered the demand for housing had sizable effects on labour market outcomes.

More generally, our findings should motivate further studies of the interactions between the housing market and the labour market, both in the US12 as well as in other countries that have experienced strong housing booms and busts, such as the UK, Ireland and Denmark.

El texto completo de este trabajo se puede encontrar here.

Este artículo forma parte de un numero de la revista Intereconomics (Review of European Economic Policy) que termina con un fórum sobre el siguiente tema: Inequality in Europe: What Can Be Done? What Should Be Done?