The evolution of the economic capacity of Spanish families in recent years reveals a disturbing paradox. Although income inequality is slowly decreasing, the country’s social structure remains almost frozen. This is reflected in a recently published work by the Institute of Fiscal Studies (IEF), part of the Ministry of Finance. The document, based on massive administrative records from the Tax Agency and the INE between 2017 and 2023, reveals that the social elevator is almost blocked at the extremes of the pyramid. More than 60% of families who start the year in the poorest 10% remain in that same group 12 months later, and mobility is even lower in the richest 10%, where the degree of permanence is around 80% in each fiscal year.
The social map shows a little more agitation in the intermediate income distribution segments. At these levels, which represent the middle classes, the annual permanence rate moves within thresholds of between 45% and 55%, reflecting somewhat greater, though moderate, mobility. Furthermore, these movements are usually short, always towards immediately higher or lower steps, and rarely represent a radical change in life.
The is titled Analysis of Household Income Inequality and Poverty and was prepared by academics María Joaquina Barroso Pérez and Miguel Gómez-Antonio. It argues that public policies during the turbulent period analyzed ―the pandemic and the subsequent inflationary crisis― have acted as an effective pillar to prevent the collapse of the most vulnerable households, but have barely served as an impetus for them to change their status. “The economic situation of these families is not altered over time; what they call the social elevator does not seem to be working as it should,” summarizes Gómez-Antonio.
To create the snapshot, the experts analyze only those Spanish households that remained stable between 2017 and 2023, meaning those in which there were no separations or changes in their composition that affected the income variable. Under this criterion, the analysis is carried out on almost 12 million family units which, in turn, are divided into 10 equally sized groups ―the deciles― in order to draw conclusions. Thus, the authors can track to what extent families manage to ascend or descend the scale over a broader cycle.
The levels of rigidity partially relax when the analysis covers the entire period studied. For example, only 36.6% of those who were in the lowest 10% income bracket in 2017 remained in the same group in 2023, while 21.8% and 11% had moved up to the second and third deciles, respectively. At the opposite extreme, 64.5% of families who were at the top in 2017 remained there six years later, while 22% of them had moved down to the ninth decile. Although these figures are more flexible than those from the annual analysis, Gómez-Antonio reminds us, they still reflect very low mobility.
The causes of this structural blockage lie in the very nature of how money is generated in each income stratum. For the wealthiest group, permanence is not a coincidence, but the result of a system where wealth generates more wealth. According to the expert, “income is self-reinforcing.” While for 90% of the population, salary is their main source of income, at the top of the pyramid, the rules of the game change, and investments, savings, and capital gains begin to gain ground, enjoying more favorable taxation and feeding back into each other. In this way, a kind of bunker is formed that protects high incomes from crises and macroeconomic fluctuations, preventing dramatic drops in position.
At the other extreme, families with fewer resources face a kind of sticky floor from which it is very difficult to escape. The report highlights that the Administration and public policies have been the great lifeline during this period marked by COVID and the price crisis, but warns that aid has a limit as a driver of upward mobility. That is, the income of the lower segments has improved thanks to levers such as the minimum wage, the revaluation of pensions in line with inflation, or the minimum vital income. However, this has not been enough to catapult these families to higher income levels. Beyond anecdotal cases ―in which purchasing power increases, for example, by inheriting a property―, “someone in a household at the lowest level can move to the second or third decile, but there isn’t much further to go,” Gómez-Antonio recalls.
Despite the stagnation, Spain has managed to improve overall inequality figures. Between 2017 and 2023, the gap between the top 10% earners and the bottom 10% has narrowed, moving from a difference of 33 to 1 to 23 to 1. This is explained by the fact that the incomes of the most humble households have grown by 51% in real terms ―discounting inflation―, compared to 5% for the wealthiest. The causes, again, lie in the minimum wage and the revaluation of pensions. What would favor mobility, the researcher reminds us, is higher wages, something that would benefit the lower strata more, where the weight of salary on income is much greater.