Emerging wealth disparities after the storm: Evidence from Spain

We examine how the recession that started in December 2007 in the United States impacted wealth accumulation and inequality among Spanish households. We find that overall wealth dropped by 15 percent between 2008 and 2011, with losses concentrating among households in the mid and top wealth quintiles. The most hard hit wealth components were business assets, primary home equity, and durable assets, which declined by 40 percent, 23 percent and 19 percent, respectively. Wealth losses among all households were likely sustained by restricted access to credit. Nonetheless, in part due to their more diversified wealth portfolios, households in the top wealth quintile amassed a greater share of the country’s wealth during the recession. Consequently, wealth inequality, which receded during the expansionary years of 2002 through 2005, rose by 2008 and continued its trend in 2011.