Inequality for Wage Earners and Self-Employed: Evidence from Panel Data

Pedro Albarran (), Raquel Carrasco () and Maite Martinez-Granado ()

No 734, Working Papers from Banco de España

Abstract: In this paper we study the evolution of income inequality for employees and self-employed workers. We highlight the importance of separately analyzing these different sources of income to gain a broader understanding of inequality. Using Spanish panel data on income and consumption from the ECPF for the period 1987-96, we decompose the variance of income shocks into a permanent and a transitory component. We find that there are noticeable differences in the evolution of income inequality, as well as in the relative importance of the permanent and transitory components across these groups. Our results point that the evolution of inequality can be basically explained by movements in the variance of the transitory component of income for the self-employed, while for the employees it is mainly driven by the variance of the permanent component, specially at the end of the period. Given these disparities, it seems that these two sources of income should be studied separately and that different policies are suitable for each group.

Keywords: Permanent income inequality; transitory income inequality; consumption; selfemployment; panel data (search for similar items in EconPapers)
JEL-codes: D12 D31 D91 E21 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2007-10
New Economics Papers: this item is included in nep-ent, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Inequality for Wage Earners and Self‐Employed: Evidence from Panel Data* (2009)
Working Paper: Inequality for wage earners and self-employed: evidence from panel data (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0734

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