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

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

DFAEII Working Papers from University of the Basque Country - Department of Foundations of Economic Analysis II

Abstract: In this paper we study the evolution of income inequality for employees and self-employed workers. We highlight the importance of separately analyze 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 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 points that the evolution of inequality can be basically explained by movements in the transitory component of income for the self-employed, while for the employees it is mainly driven by 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 and transitory income inequality; consumption; self-employment (search for similar items in EconPapers)
JEL-codes: D12 D31 D91 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-lab and nep-mac
Date: 2007-03-23
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Related works:
Working Paper: Inequality for Wage Earners and Self-Employed: Evidence from Panel Data (2007)
Working Paper: Inequality for wage earners and self-employed: evidence from panel data (2007)
Journal Article: Inequality for Wage Earners and Self-Employed: Evidence from Panel Data (2009)
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Dpto. de Fundamentos del Análisis Económico II, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

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