The Dynamics of Inequality and Mobility: A Panel Data Analysis of the Spanish Income Tax

Abstract

[Abstract] Objective: This article aims to analyze the evolution of income inequality and mobility in Spain during the period 1999–2011 by exploiting data from personal income tax returns. Methods: To assess the evolution of inequality over the period analyzed, we have used some of the many metrics developed for this purpose, each of which offers a different approach depending on the segment of the income distribution they focus on (Gini coefficient, income shares, generalized entropy index, and the Atkinson class of measures). Results: Our results suggest that, after a period of slightly declining income inequality, Spain experienced a rise in inequality in the years immediately preceding the Great Recession, before falling back to precrisis levels. With regard to income mobility, during this period, it was more common for individuals in the middle of the distribution to experience changes, while those at the top and bottom maintained a more stable position. Conclusions: The economic boom of the late 1990s and early 2000s, as well as the Great Recession, had a significant impact on income inequality and mobility.