Real-Time Inequality and the Welfare State in Motion: Evidence from COVID-19 in Spain

Oriol Aspachs, Josep Mestres, Alberto Graziano, Ruben Durante, Marta Reynal-Querol and José García-Montalvo

No 1202, Working Papers from Barcelona School of Economics

Abstract: Official statistics on economic inequality are only available at low frequency and with considerable delay. This makes it challenging to assess the impact on inequality of fast-unfolding crises like the COVID-19 pandemic, and to rapidly evaluate and tailor policy responses. We propose a new methodology to track income inequality at high frequency using anonymized data from bank records for over three million account holders in Spain. Using this approach, we analyse how inequality evolved between February and November 2020 (compared to the same months of 2019). We first show that the wage distribution in our data matches very closely that from official labour surveys. We then document that, in the absence of government intervention, inequality would have increased dramatically, mainly due to job losses and wage cuts experienced by low-wage workers. The increase in pre-transfer inequality was especially pronounced among the young and the foreign-born, and in regions more dependent on services. Finally, we find that public transfers and unemployment insurance schemes were very effective at providing a safety net to the most affected segments of the population and at offsetting most of the increase in inequality.

Keywords: inequality; COVID-19; administrative data; high frequency (search for similar items in EconPapers)
JEL-codes: C81 D63 E24 J31 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-dem, nep-lma and nep-mac
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Citations: View citations in EconPapers (14)

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