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How Income Growth Differs with Children in Spain: a Comparative European Perspective

Child Indicators Research volume 9, pages 357–370 (2016)Cite this article

Abstract

The Great Recession has notably affected household income in most European countries, but not in the same way for all types of household. This note aims to discuss whether significant differences exist in income growth between households with and without children. The study focuses on Spain, finding that Spanish households with children benefited less from income growth in the period 2004–2008 and experienced more decay in income in the period 2008–2012. We compare patterns of income growth for households with and without children in several European countries, as well as evaluate the uneven impact of the crisis and the policies adopted after the crisis in both types of household across different countries.

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Notes

  1. 1.

    As Germany and the United Kingdom have no data for 2004, we use data from 2005.

  2. 2.

    A value of 1 is assigned to the first adult in the household, 0.5 to each remaining adult, and 0.3 to each member younger than 14.

  3. 3.

    EU-SILC allows us to follow only individuals for solely 4 years, not the whole period (2004–2012). Moreover, as we are interested in the effects at the household level, we cannot follow a household as household is not a fixed unit over time (due to child birth, marriage dissolution, etc.).

  4. 4.

    Following the suggestion of the referees, we have considered two alternative definitions of households with children: first, restricting the study to single unit households with children, and second, only considering those with children aged under 18 and excluding those aged between 18 and 24 who are economically inactive. In both cases conclusions remain. These results are available upon request.

  5. 5.

    We have also observed that the mean number of children by household is greater the lower in the income distribution.

  6. 6.

    Extreme percentiles are eliminated from the graph to increase the consistency of the comparison of the different GICs. Due to the possible contamination of data by outliers, truncation of the distribution is often used in comparisons of inequality, whether inter-temporal or spatial (Cowell et al. 1999).

  7. 7.

    The analysis has been replicated for the EU-15 countries. For the sake of simplicity, however, we present the results of these four countries plus Spain. All results are available upon request.

  8. 8.

    Note that there was a break in series in 2012 for the United Kingdom, so the results for this country have to be interpreted with caution. We have made a sensitivity analysis to check for the robustness of results considering the period 2008–2011 and main conclusions remain.

  9. 9.

    Tax allowances are deducted from taxable income while tax credits are subtracted from the amount of tax due. Tax credits may be wasteable (they are only used if tax liability is positive) or non-wasteable/refundable (they can be paid as cash transfers to the taxpayer whenever the benefit exceeds tax liability). Both cash and tax benefits usually vary according to the age and number of children (Marx et al. 2015).

  10. 10.

    In Spain and Italy, through the Gini coefficient for households with children, we observe that transfers system help to mitigate the increment in inequality, but insufficiently to offset the more unequal distribution of incomes before transfers during the crisis.

  11. 11.

    Some values may differ from official figures published by Eurostat as we use EU-SILC data and there is no information on administrative cost of transfers.

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Acknowledgments

The authors gratefully acknowledge the useful comments and advices of the referees as well as the financial support provided by the Spanish Institute for Fiscal Studies. Ana I. Moro-Egido and Elena Bárcena-Martín also thank the financial support provided by the Spanish Ministry of Education through the Grant ECO2012-33993.

Author information

Affiliations

  1. Statistics and Econometrics Department, University of Malaga, El Ejido Campus, E-29071, Málaga, Spain

    E. Bárcena-Martín

  2. Economic Theory and History Department, University of Granada, Cartuja Campus, E-18011, Granada, Spain

    A. I. Moro-Egido

  3. Applied Economics (Economic Policy) Department, University of Malaga, El Ejido Campus, E-29071, Málaga, Spain

    S. Pérez-Moreno

Authors
  1. E. Bárcena-Martín
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  2. A. I. Moro-Egido
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  3. S. Pérez-Moreno
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Correspondence to S. Pérez-Moreno.

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Bárcena-Martín, E., Moro-Egido, A.I. & Pérez-Moreno, S. How Income Growth Differs with Children in Spain: a Comparative European Perspective. Child Ind Res 9, 357–370 (2016). https://doi.org/10.1007/s12187-015-9329-z

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Keywords

  • Household income
  • Children
  • Growth incidence curve
  • EU-SILC

JEL Classification

  • D31
  • O15
  • J13