To be or not to be (employed): two decades of fluctuating earnings and income inequality in Spain

Abstract

This paper offers a descriptive overview of the evolution of individual earnings and household income inequality in Spain over the last two decades. During this period, there has been a noteworthy increase in the level of education of the working-age population (aged 25–60) along with a rise in female labour force participation. Substantial changes have also occurred in household size and composition, with reductions in marriage and cohabitation, in particular among lower-educated groups. These changes have a direct impact on the distribution of individual earnings and household income and, therefore, the evolution of inequality. Fluctuations in inequality, however, primarily moved with the business cycle. After a period of decreasing inequality during the mid-1990s expansion, the 2008 global financial crisis led to sharp rises in both earnings and income inequality that peaked around 2014. After that, both unemployment and inequality decreased, except for the transitory surge during the COVID-19 pandemic. By 2022, inequality indicators have almost returned to pre-2008 levels.