Wage Inequality in Spain: Recent Developments

42 Pages Posted: 22 Aug 2006  

Mario Izquierdo

Banco de España

Aitor Lacuesta

Banco de España

Date Written: July 2007

Abstract

This paper analyses wage inequality in Spain from 1995 to 2002. Inequality has decreased slightly in this period although the fall has not been constant over the whole distribution. We use non-parametric techniques to distinguish the effect on inequality of changes in the composition of the labour force and changes in relative returns. We focus mainly on three factors that have varied substantially between 1995 and 2002: female participation, educational attainment and changes in the tenure level. On one hand, changes in the composition of the labour force would have increased inequality had the structure of wages not changed in relation to the 1995 level. Changes in education and especially tenure would have been responsible for most of the higher dispersion. On the other, changes in relative returns between 1995 and 2002 are predominant and are responsible for the lower dispersion observed in the latter year. Changes in the returns to education are the main important factor underlying this decrease in inequality.

Keywords: inequality, wage distribution, labour force composition

JEL Classification: J30, J00

Suggested Citation

Izquierdo, Mario and Lacuesta, Aitor, Wage Inequality in Spain: Recent Developments (July 2007). Banco de Espana Research Paper No. 0615; ECB Working Paper No. 781. Available at SSRN: https://ssrn.com/abstract=925810

Mario Izquierdo

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Aitor Lacuesta (Contact Author)

Banco de España ( email )

Madrid 28014
Spain

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