Inequality in heritage increases and weights young people | Economy


The inequality measured by wealth increases strongly in Spain, especially due to the difficulties of new young and low-income households to save, access a mortgage and establish assets. All this happens despite the recovery. If only income from work is taken, the gap is being corrected thanks to improved employment. But he does it very slowly. And the differences in total income, which include rents, dividends or capital gains on financial investments, are barely cut. This follows from the latest data of the Family Financial Survey Prepared by the Bank of Spain and comparing 2017 with 2014 and 2011. The momentum of the economy is not enough To deal with the problem.

Although these are data that are delayed by the effort to compile them and contrast them with other figures from the INE or the Tax Agency, their value is very high. On the evolution of income It was already noted that the correction of inequality was moving very slowly. But regarding inequality In heritage there were no statistics. Now, yes: 20% of the richest households owned 15 times more than the poorest 20% in 2014. In 2017 it had 28 times more. Almost double.


Inequality in Spain

Relationship between 20% of the population with the highest income compared to 20% with the lowest income

The highest incomes win 3.94 times more that the low income

It also includes dividends, rents, capital gains and losses of real estate assets and financial products …

In three years inequality declined slightly

The richest 20% It has 28.25 times more equity that the poorest

Source: Bank of Spain.

Inequality in Spain

Relationship between 20% of the population with the highest income compared to 20% with the lowest income

It also includes dividends, rents, capital gains and losses of real estate assets and financial products …

Source: Bank of Spain.

Inequality in Spain

Relationship between 20% of the population with the highest income compared to 20% with the lowest income

The highest incomes win 3.94 times more that the low income

It also includes dividends, rents, capital gains and losses of real estate assets and financial products …

In three years inequality declined slightly

The richest 20% It has 28.25 times more equity that the poorest

Source: Bank of Spain.

Inequality in heritage increases and weights young people



The Bank of Spain stresses that it is young and low-income households that now accumulate much less wealth than before. Everything points to lower income and stricter conditions of access to credit mean that young people and low incomes cannot save and get a mortgage. So they cannot accumulate assets and instead have to dedicate that money to rent. Spain has always stood out because even the humblest families had a high percentage of home ownership. This may begin to change if this trend persists.

Experts always point out that it is not ideal to have the savings concentrated on the brick, and remember that loans cannot be granted that cannot be paid. However, a decade ago, young people could obtain a mortgage before and save and form an estate. But now not even that. And in recent years they are being forced to pay more for rent and face a rising housing market. Faced with these problems, economists like Thomas Piketty They have come to propose a tax on the property of the rich of 90% that serves to give 120,000 euros to each young person of 25 years.


It measures inequality in the distribution of income or wealth. It ranges from 0, in which all people have the same disposable income, to 1, in which a single person holds all available income.

While rent has been reduced, wealth inequality has increased

Source: Bank of Spain.

It measures inequality in the distribution of income or wealth. It ranges from 0, in which all people have the same disposable income, to 1, in which a single person holds all available income.

While rent has been reduced, wealth inequality has increased

Source: Bank of Spain.

It measures inequality in the distribution of income or wealth. It ranges from 0, in which all people have the same disposable income, to 1, in which a single person holds all available income.

While rent has been reduced, wealth inequality has increased

Source: Bank of Spain.

Worse in new homes

The bank’s financial survey draws a bleak picture for the assets of young people and low incomes: “The households whose head of household was under 35 years of age had net average wealth at the end of 2017 [una vez restadas las deudas] of 5,300 euros, well below the 71,600 of those who were in this group in 2011, ”says the report.

And he adds that the net wealth of the poorest 25% was 600 euros in 2017 compared to 7,000 euros in 2011. The Bank of Spain notes that these families of young people and low income in 2011 are not the same as in 2017. That is, these results are largely explained by the input of new young homes that are now in worse condition.

Inequality in heritage increases and weights young people



These numbers also have to do with the evolution of income. The income of young people is still far from recovering: in 2016 they were 18% below 2010. And so it is more difficult to achieve the mortgage. But these figures are also related to the fact that the wealth of the richest 20% has endured better, staying in 2017 almost in 2011.


How much accumulate the most

do they have

% of income or equity that households with higher incomes or equity monopolize

1% with more income enters 7% of the total

The richest 10%

has more than half of the assets

Source: Bank of Spain.

How much do those who have more accumulate?

% of income or equity that households with higher incomes or equity monopolize

1% with more income enters 7% of the total

The richest 10%

has more than half of the assets

Source: Bank of Spain.

How much do those who have more accumulate?

% of income or equity that households with higher incomes or equity monopolize

1% with more income enters 7% of the total

The richest 10% own more than half of the assets

Source: Bank of Spain.

Inequality in heritage increases and weights young people



The increase in the wealth gap has occurred despite the economic improvement. Whichever indicator is taken, the distance between rich and poor households has been shortened when talking about labor income. The jump of not having a job to have it correct the inequality. Even if the position is now more precarious or if there was already an unemployment benefit. However, it is not doing so with the intensity that one would expect despite the fact that a lot of employment has been created in the recovery. And that in 2017 the pre-crisis total income levels were close to being restored, says the supervisor.

In the 2014 survey, 10% with higher incomes earned 7.64 times more than 10% with lower incomes. In 2017, that ratio dropped to 7.36. The Gini, the index that measures the dispersion of income, zero being absolute equality and one the total concentration of all resources in a single individual, improves somewhat. The proportion of the total labor income that households with higher incomes take is also very moderately reduced: 10% of more income accounted for 30.91% of all compared to 30.56% today.

The Bank of Spain does not explain the reasons for it to improve so slowly. But in other reports he pointed out that employment recovery is being less intense in hours. Or what is the same, companies hire more for seasons, weeks or even only for the hours that need them, depending on the demand they have. And that reduces the labor income of new workers, undermining the improvement of equity.

The Bank of Spain has also highlighted the wage freeze applied to new generations: as a result of the Great Recession and once inflation is subtracted, they earn the same as a decade ago, when it is normal for the new cohorts to always improve on the following ones.

Another important explanation is that 10% with fewer incomes still do not recover. At this point there is still 14% unemployment. And this strike mostly affects that first decile.

On the other hand, as they are homes, improvements can be diluted because it includes the situation of several members, from the son to the head of the family or the pensioner. Each with a different dynamic. For example, the average pension has been earning a lot as workers with better careers retired and, consequently, increased benefits. And family reunification helped cushion the blow of the crisis.

But now some may be unbundling with the emancipation of the young man who gets a job. What would be increasing inequality by forming new homes with less income. However, it seems that this last effect would be limited by increasing the percentage that does not leave parental housing: half of the young people between 24 and 29 years and a quarter of those aged 30 to 35 remain at their parents’ house.

Better for the rentier

The story is, however, different once the total income set is observed. There the inequality decreases very little or not, depending on the indicator taken. In the Gini it even increases. The 10% with higher incomes increases their participation in total income from 30.91% to 32.44%. And it is pocketed 7.15 times what earns 10% lower income compared to 7.00 times more than it obtained three years earlier.

It is about small differences. But the conclusion is that inequality is hardly corrected after several years of recovery. These other rents include rent, capital gains or losses from sales of real estate assets, real assets such as jewelry or antiques, or financial assets. Interest and deposits, severance pay or inheritance are also collected. And business dividends that are not managed by the household.

In short, it seems that these incomes would be giving better returns than labor. Something that is not surprising considering the improvement of the financial markets and real estate, driven largely by monetary policy. It has always been said that the richest 10% have a greater capacity to obtain returns when things are going well when they can move their capital in a globalized economy, with a more diversified portfolio and in which more risk, more shares and properties come in. Instead, those same low rates penalize the saver who only has deposits.

A generational problem

There are two reasons why inequality worries. One is the sustainability of society. Another is that there is evidence that growth is more robust when it is more distributed. Especially since low incomes have a greater propensity to consume.

This has been pointed out, for example, by the IMF or the OECD. The Bank of Spain adds that in the problem of inequality there is an important generational component. “Despite the recovery, the average income and wealth of young families are still clearly inferior to those of the pre-crisis period,” he says. And he adds that “the proper functioning of some markets and institutions is essential to achieve more stable and socially sustainable growth.” Cite the rental, labor, financing and savings markets. Also the need to strengthen education and investment in human capital. And he emphasizes that public finances must be reoriented so that they are more favorable to young people. “The profound demographic changes that Spanish society is already experiencing require a greater emphasis on aspects related to intergenerational equity,” the document concludes.

The supervisory body also emphasizes the division that exists between highly protected and temporary temporary jobs that are not.

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