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

The plutocratic bias in the CPI : evidence from Spain

We define the plutocratic bias as the difference between the inflation measured according to the current official CPI and a democratic index in which all households receive the same weight. (i) We estimate that during the 1990s the plutocratic bias in Spain amounts to 0.055 per cent per year, or about one third of the classical substitution bias estimated by the Boskin Commission for the U.S. (ii) We find that a 16-dimensional commodity space can be conveniently reduced to 3 dimensions, consisting of a luxury good and two necessities. The price behavior of these 3 goods provides a convincing explanation of the oscillations experimented by the plutocratic bias. (iii) Finally, the fact that the plutocratic bias is positive during this period, implies that the change in money income inequality is between 2 and 5 per cent greater than the change in real income inequality. We study the robustness of these results to the time period considered and to the definition of the group index which serves as an alternative to the CPI. We estimate that during the 1980s and the second part of the 1970s in Spain, the plutocratic bias is 0.033 and 0.239 per cent per year, respectively

The Laspeyres bias in the Spanish consumer price index

The CPI compares the cost of acquiring a reference quantity vector at current and base prices. Such reference vector is the vector of mean quantities actually bought by a reference population, whose consumption patterns are investigated during a period t prior to the index base period 0. In this paper we show that unless one takes into account the price change between these two dates, the CPI ceases to be a proper statistical price index of the Laspeyres type. Among several negative consequences, the most important is that this omission produces a bias in the measurement of inflation which we call the `Laspeyres bias.' Using Spanish data, we estimate that, e.g., from 1992 to 1998, the size of the Laspeyres bias is -0.061 per cent per year, or about 6 per cent (in absolute terms) of the positive bias estimated by the Boskin commission for the U.S., which is equal to 1.1 per cent per year. The Laspeyres bias in shorter time periods reached -0.122, and -0.108 per cent per year in 1992, and 1997, respectivel

The plutocratic gap in the CPI : evidence from Spain

The plutocratic gap is defined as the difference between the inflation measured according to the current official consumer price index (CPI) and a democratic index in which all households receive the same weight. During 1992–97, the plutocratic gap in Spain averaged 0.055 percentage points a year. Since positive and negative gaps cancel out, however, the average absolute gap is significantly larger: 0.090 percentage points a year. For the purposes of accounting for the plutocratic gap, a 53-dimensional commodity space can be conveniently reduced to two dimensions: a luxury index and a necessities index.Publicad

The Plutocratic Gap in the CPI: Evidence from Spain

The plutocratic gap is defined as the difference between the inflation measured according to the current official consumer price index (CPI) and a democratic index in which all households receive the same weight. During 1992-97, the plutocratic gap in Spain averaged 0.055 percentage points a year. Since positive and negative gaps cancel out, however, the average absolute gap is significantly larger: 0.090 percentage points a year. For the purposes of accounting for the plutocratic gap, a 53-dimensional commodity space can be conveniently reduced to two dimensions: a luxury index and a necessities index. Copyright 2003, International Monetary Fund

Distributive aspects of the quality change bias in the CPI.

This paper shows that the richer households are significantly more affected by the quality-change bias (QCB) in the CPI. The empirical analysis combines the detailed information pertaining to the size of the QCB for the US with household-specific CPIs for Spain.Plutocratic gap; Money inequality; Price index; CPI; Quality bias;

The Laspeyres bias in the Spanish consumer price index.

The CPI compares the cost of acquiring a reference quantity vector at current and base prices. Such reference vector is the vector of mean quantities actually bought by a reference population, whose consumption patterns are investigated during a period tau prior to the index base period 0. This paper shows that unless the price change between these two dates is taken into account, the CPI ceases to be a proper statistical price index of the Laspeyres type. Among several negative consequences, the most important is that this omission produces a bias in the measurement of inflation: the 'Laspeyres bias'. Using Spanish data, the size of the Laspeyres bias is estimated at -0.061% per year, during 1992-1998. The Laspeyres bias in shorter time periods reached -0.122% per year in 1992, and -0.108 in 1997.

The Banco de España Business Activity Survey: 2023 Q4

Rationale The Banco de España Business Activity Survey (EBAE) provides real-time information on a broad sample of Spanish firms’ turnover, employment and costs and prices. This is particularly helpful for diagnosing current economic developments. Takeaways •Firms reported no change in their turnover in 2023 Q4, after it decreased in Q3, and perceived a fall in employment. •Inflationary pressures on production costs and selling prices are reported to have softened somewhat, but expectations suggest that they will increase slightly next year. •Business activity has been affected by growing economic policy uncertainty, labour shortages and an increase in factors related to the tightening of financing conditions (difficulties in accessing finance and higher financial costs)

Price, wage and employment response to shocks: evidence from the WDN survey

This paper analyses information from survey data collected in the framework of the Eurosystem's Wage Dynamics Network (WDN) on patterns of firm-level adjustment to shocks. We document that the relative intensity and the character of price vs. cost and wage vs. employment adjustments in response to cost-push shocks depend - in theoretically sensible ways - on the intensity of competition in firms' product markets, on the importance of collective wage bargaining and on other structural and institutional features of firms and of their environment. Focusing on the passthrough of cost shocks to prices, our results suggest that the pass-through is lower in highly competitive firms. Furthermore, a high degree of employment protection and collective wage agreements tend to make this pass-through stronger. --Wage bargaining,labour-market institutions,survey data,European Union

The incidence of nominal and real wage rigidity : an individual-based sectoral approach

This paper presents estimates based on individual data of downward nominal and real wage rigidities for thirteen sectors in Belgium, Denmark, Spain and Portugal. Our methodology follows the approach recently developed for the International Wage Flexibility Project, whereby resistance to nominal and real wage cuts is measured through departures of observed individual wage change histograms from an estimated counterfactual wage change distribution that would have prevailed in the absence of rigidity. We evaluate the role of worker and firm characteristics in shaping wage rigidities. We also confront our estimates of wage rigidities to structural features of the labour markets studied, such as the wage bargaining level, variable pay policy and the degree of product market competition. We find that the use of firm-level collective agreements in countries with rather centralized wage formation reduces the degree of real wage rigidity. This finding suggests that some degree of decentralization within highly centralized countries allows firms to adjust wages downwards, when business conditions turn ba