Income inequality among the active population and the distributive effects of economic transfers in Spain. The economic recovery

Abstract

This paper aims to provide evidence about the change of income inequality in the active population in Spain since 2008, it also aims to investigate the distributional effects of monetary transfers and taxation during the long economic recovery. Investigating income inequality could provide important insights into the evolution of any given country, as it has real and measurable effects on the GDP. These effects can be either positive or negative. For example, inequality can promote growth by fostering aggregate savings or stimulating R&D (Kuznets, 1955), inequality is said to matter in terms of growth duration, as Berg & OSTRY (2017) demonstrated in their research, the relation between “growth spells”1 and inequality remained strong despite the inclusion of many other possible determinants. Regarding the negative effects, they mostly tend to develop rather slowly and include a change of institution, the rise of socio-political movements or the reduction of spending on education (Bénabou, 1996). Among other things, income inequality is also positively related to domestic violence (Weede, 1981) or violent crime (Morgan, 2000). Income inequality could also affect the population’s health and well-being (Pickett & Wilkinson, 2015)