Wage inequality in Spain: recent developments

This paper analyses wage inequality in Spain from 1995 to 2002. Inequality has decreased slightly in this period although the fall has not been constant over the whole distribution. We use non-parametric techniques to distinguish the effect on inequality of changes in the composition of the labour force and changes in relative returns. We focus mainly on three factors that have varied substantially between 1995 and 2002: female participation, educational attainment and changes in the tenure level. On one hand, changes in the composition of the labour force would have increased inequality had the structure of wages not changed in relation to the 1995 level. Changes in education and especially tenure would have been responsible for most of the higher dispersion. On the other, changes in relative returns between 1995 and 2002 are predominant and are responsible for the lower dispersion observed in the latter year. Changes in the returns to education are the main important factor underlying this decrease in inequality. JEL Classification: J30, J00Inequality, labour force composition, wage distribution

Evolución reciente de la desigualdad reciente en España e implicaciones para la política económica

La ponencia hace un breve repaso de los argumentos que la literatura económica ha ofrecido para relacionar desigualdad y crecimiento económico. Posteriormente, presenta diferentes estadísticas que describen el nivel y la variación de la desigualdad en España en el pasado reciente. En tercer lugar, se recopila evidencia de otros trabajos, principalmente empíricos, que explicarían el nivel y la variación de la desigualdad en nuestro país. Finalmente, a la luz de la evidencia anterior se valoran diferentes actuaciones de política económica con el objetivo de reducir el nivel de desigualdad de esta economíaInequality affects economic growth via different channels. It is for this reason that its analysis is particularly relevant and there is an increasing necessity to understand the mechanisms that determine its evolution. Within the EU27, Spain tends to have higher than average inequality due to a greater heterogeneity of its population instead of high wage differentials among workers. Over time, Spain presents a more countercyclical inequality. In particular, inequality increases in recession and decreases in expansions. As a consequence fiscal policies affecting relative earnings might be less effective than structural reforms aiming to decrease school early dropouts and the high cyclicality of employmen

Emigration and human capital : who leaves, who comes back and what difference does it make?

This paper studies the loss of human capital that emigration generates in the country of origin. To that end I estimate the human capital distribution of emigrants had they not migrated. Unlike previous studies, I take into account the selection of migrants in terms of unobserved characteristics that affect their productivity. Wages in Mexico of those migrants who come back home after being abroad for some time will be crucial to learn something about the selection of non-returning migrants in terms of unobserved productivity. To test whether returning migrants' wages contain any useful information, I follow two steps. First, I use the model of Borjas and Bratsberg (1986) to show that, regardless of the cause for coming back, the distribution of abilities of non-returning migrants is more similar to the distribution of temporary migrants than to that of non-migrants. Moreover, I test some implications of the model in the data. Second, I show that returning migrants' wages reflect their pre-emigration productivity and are not affected by possible human capital gains derived from the decision to emigrate. Taking into account all this evidence, I use returning migrants' wages in Mexico upon return to estimate the distribution of human capital of non-returning migrants had they not migrated. I show that emigrants come form the middle part of the distribution of human capital in the origin country. I find evidence that taking unobserved human capital factors into account is relevant for the dispersion of the estimated distribution as well as for each of its quantiles. Moreover, it does not greatly affect the aggregate mean of human capital. [resumen de autor

Testing the 'Brain Gain' Hypothesis: Micro Evidence from Cape Verde

Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey purposely designed and conducted to answer this research question. We analyze the case of Cape Verde, a country with allegedly the highest 'brain drain' in Africa, despite a marked record of income and human capital growth in recent decades. Our micro data enables us to propose the first explicit test of 'brain gain' arguments according to which the prospects of own future migration can positively impact educational attainment. According to our results, a 10pp increase in the probability of own future migration may improve the average probability of completing intermediate secondary schooling by 8pp for individuals who do not migrate before age 16. Strikingly, this same 10pp increase may raise the probability of completing intermediate secondary schooling by 11pp for an individual whose parents were both non migrants when the educational decision was made. Our findings are robust to the choice of instruments and econometric model. Overall, we find that there may be substantial human capital gains from lowering migration barriers.household survey, Cape Verde, brain drain, brain gain, international migration, human capital, effects of emigration in origin countries, sub-Saharan Africa

Chutes and Ladders: Dual Tracks and the Motherhood Dip

Using rich panel data recently available from Spanish Social Security records, we find that a negative motherhood earnings differential of 2.3 log points remains even after controlling for both individual- and firm-level unobserved heterogeneity. The analysis of the mothers and childless women's earnings trajectories over time reveals that "mothers to be" experience important earnings increases (of up to 6 log points) several years prior to giving birth to their first child. However, this earnings' advantage gets seriously hit right after birth, and it is not until nine years later that mothers' earnings return to their pre-birth (relative) levels. The study finds that heterogeneity matters as most of the motherhood penalty and earnings' dip is driven by mothers working in the primary labor market (with permanent contracts). For these women, much of the earnings losses occur because mothers change employers to work part-time, or (if they stay with their former employer) they take leave of absence. An instrumental variable approach is used to address concerns of selection into type of contract. We exploit variation in the amount, timing and profiling of subsidies offered to firms when hiring permanent workers, a policy that started to be implemented in Spain in 1997.earnings trajectories, individual- and firm-level fixed-effects estimator, permanent and fixed-term contracts, underlying channels

Testing the 'Brain Gain' Hypothesis: MIcro Evidence from Cape Verde

Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey purposely designed and conducted to answer this research question. We analyze the case of Cape Verde, a country with allegedly the highest ‘brain drain’ in Africa, despite a marked record of income and human capital growth in recent decades. Our micro data enables us to propose the first explicit test of ‘brain gain’ arguments according to which the prospects of own future migration can positively impact educational attainment. According to our results, a 10pp increase in the probability of own future migration improves the average probability of completing intermediate secondary schooling by 8pp. Our findings are robust to the choice of instruments and econometric model. Overall, we find that there may be substantial human capital gains from lowering migration barriers.

Population at risk of poverty or social exclusion in Spain, according to the European Council

Artículo de revistaThis article describes the concept of population at risk of poverty or social exclusion that is used to quantify the targets set in this respect for the countries of the European Union. Drawing on this definition, the article analyses how poverty in Spain has evolved. It also examines the factors that have contributed to poverty levels in Spain still being above the official targets for 2020 and the average of the rest of the countries of the European Union. Lastly, some aspects of the definition are identified that suggest that the concept of economic poverty should be addressed from several complementary standpoints

Ageing, productivity and employment status

Artículo de revistaThe article analyses how labour market participation and the type of work performed change with age. Drawing on data from the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC), it is documented that as people age they gradually lose certain skills relating to their ability to do physical work or use new technologies, or their literacy and numeracy skills. By contrast, as they build up experience, older workers develop better planning skills and a greater ability to supervise the work of others and respond to setbacks. However, the transition between these tasks is not problem-free, especially in certain sectors, such as agriculture, small retail trade, hotels and restaurants and domestic help, which in Spain are more likely to have a higher concentration of older workers with a lower level of education than in the rest of the euro area. In this respect, larger firm size, flexible working environments, retirement schemes with certain specificities relating to skills required in different occupations and an increase in continuing training would all be conducive to a lower decline in productivity and a higher degree of employability of older workers. This is particularly important in Spain’s current demographic context of a gradually ageing population

The implicit cost of carbon abatement during the COVID-19 pandemic

This paper provides novel estimates of the implicit cost of carbon abatement associated with the COVID-19 crisis. We compare that to the costs from renewable investments that would lead to similar abatement. Focusing on the Spanish economy and its power sector, we combine machine learning and simulation tools to construct a precise counterfactual of market performance in absence of the crisis. Results suggest that power sector CO2 emissions fell by 4.13 Million Tons (about 11.5%) during 2020 due to the pandemic, less than half of the actual year-on-year emissions reductions. Investing in renewables to achieve similar carbon abatement would yield an implicit cost of 60-65 Euro/Ton of CO2. Conversely, the pandemic caused a substantial GDP loss in Spain, relative to the extent of overall carbon abatement. The resulting cost of carbon abatement associated with the pandemic thus exceeded 7 thousand Euro/Ton.This work has received funding from the European Research Council (ERC) under the European Union Horizon 2020 Research and Innovation Program (Grant Agreement No 772331

Cyclical migration patterns

Artículo de revist