Quantitative Economics

Journal Of The Econometric Society

Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331

Quantitative Economics: Nov, 2022, Volume 13, Issue 4

Income Risk Inequality: Evidence from Spanish Administrative Records

https://doi.org/10.3982/QE1887
p. 1747-1801

Manuel Arellano, Stéphane Bonhomme, Micole De Vera, Laura Hospido, Siqi Wei

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.


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Supplement to "Income Risk Inequality: Evidence from Spanish Administrative Records"

Manuel Arellano, Stéphane Bonhomme, Micole De Vera, Laura Hospido and Siqi Wei