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In this paper we use administrative data from the social security to study income dynamics and income risk inequality in Spain between 2005 and 2018. We construct individual measures of income risk as functions of past employment history, income, and demographics. Focusing on males, we document that income risk is highly unequal in Spain: more than half of the economy has close to perfect predictability of their income, while some face considerable uncertainty. Income risk is inversely related to income and age, and income risk inequality increases markedly in the recession. These findings are robust to a variety of specifications, including using neural networks for prediction and allowing for individual unobserved heterogeneity.
Authors
Research Fellow Centre for Monetary and Financial Studies (CEMFI)
Manuel is a Research Fellow of the IFS and a Professor of Econometrics at CEMFI, Madrid.
Professor of Economics University of Chicago
Micole De Vera
Laura Hospido
Siqi Wei
Working Paper details
- DOI
- 10.1920/wp.ifs.2021.3721
- Publisher
- Institute for Fiscal Studies
Suggested citation
Arellano, M et al. (2021). Income risk inequality: evidence from Spanish administrative records. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/income-risk-inequality-evidence-spanish-administrative-records (accessed: 30 June 2024).
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