The Anatomy of Real Money and Real Income Inequality in Spain: 1973-1974 to 1980-1981

Abstract

This paper examines how far we can go in establishing normative conclusions with regard to the evolution of inequality over time, making use of statistical methods which do not need either too specific assumptions about individual preferences or their recovery by means of complex and expensive econometric methods. The decomposition of the change in money inequality into a real- and a price effect occupies the center of the analysis. We have used statistical Laspeyres type price indices which are household specific and a parameterization which captures the weight one is prepared to give to household size in the definition of equivalent expenditure per person. The explanatory power of overall inequality provided by different characteristics is studied by means of statistical constructs independent of the equivalence scale used.