Asset Publisher

Capital income and income inequality in Spain, 1980-2020

Report

Capital income and income inequality in Spain, 1980-2020

Miguel Artola Blanco, Carlos III University of Madrid; Clara Martínez-Toledano, Imperial College London; Alice Sodano, Paris School of Economics;
Project selected in the Call to support research projects on social inequality (LL2020_5)

Income inequality has grown steadily in Spain over the past two decades. This paper uses a new methodology to attribute the total national income to adult residents in Spain. The national income items that have increased most are rents and retained earnings of firms. Given that the latter form of income is concentrated among the richest groups, income inequality among individuals has increased. Similarly, income dispersion across age groups has been accentuated by higher unemployment and lower wages among younger cohorts. These trends are some of the reasons why Spain has much higher levels of pre-tax income inequality than the European average.
Key points
  • 1
       The proportion of capital income has increased by 6 percentage points in Spain since 2006. Rising rental income and corporate profits account for most of this trend. A growing share of capital income is not declared for personal income tax (IRPF) purposes.
  • 2
       The increase in capital income predominantly favours higher-income households, thereby increasing levels of inequality.
  • 3
       The share of national income of the richest 1% of the population is at record levels. This group accounted for 18% of national income in 2018, approximately three points more than in the first decade of the century. The bulk of this increase is due to the rise of capital income.
  • 4
       Spain has high levels of inequality compared to other developed economies. The top 1% of income earners receives 2 percentage points more of national income than in other countries with similar estimates.
  • 5
       Inequality by age group has become more pronounced. Labour incomes fell most among young people during the 2008 crisis. Furthermore, strong inequality when it comes to distributing capital income has been compounded, as these cohorts have been less able to save and diversify their wealth.
Top 1% incomes lead rising inequality
Top 1% incomes lead rising inequality

Top percentile income by type of income as a percentage of national income, Spain, 1984-2018.

Classification

Tags

Subject areas

Related content

Article

Inequality of carbon emissions across income and age in Spain

The top 1% of carbon emitters have a carbon footprint that is 7 times higher than the average.

Article

Multidimensional poverty dynamics in Spain and other European countries

Poor people have a higher probability of facing additional shortages and a lower probability of suffering an existing shortage than people who are not poor.

Report

Social welfare systems and inequality in Europe

Spain’s social protection system is less redistributive than those of other EU countries. What reforms could help reduce economic inequality in Spain?

Article

Private tuition and economic inequality in Spain

33% of pupils with lower economic capacity attend private tuition, in contrast with 57% of pupils with a higher profile. Differentials in participation in extracurricular activities in relation to economic capacity are greater in secondary school.

Article

How do people’s acquaintances shape their support for economic redistribution and social protection?

We analyse how opinions on economic redistribution and social protection depend not only on family incomes, but also on the wages earned by people in the immediate social environment.

You may also find interesting

Young people, opportunities, and futures

Dossier

Young people, opportunities, and futures


Social Inclusion

What challenges are faced by young people in Spain and Portugal? In the Social Observatory’s twelfth Dossier, we analyse it.

Interview Robert Pogue Harrison

Interview

Interview Robert Pogue Harrison


Social Inclusion

Robert Pogue Harrison examines the concept of youth from the perspective of philosophy and cultural studies. How do we define it?

Temporary employment rate young workers

Article

Temporary employment rate young workers


Social Inclusion

The reduction in the casualisation of young people since the labour reforms is very evident in Spain and almost imperceptible in Portugal. Why?