Fiscal redistribution and the urban-rural gap in Spain

Abstract

This paper analyzes how efficient the Spanish fiscal system is in closing the urban-rural gap in income. Using the CEQ fiscal analysis methodology, I examine data of the year 2020 from the Living Conditions Survey and the Household Budget Survey data. Results show that a significant urban-rural difference in income exists before redistribution, but this difference is reduced after the redistribution process. Direct taxes and transfers are the only reason for this decrease in inequality, while indirect taxes co-payments and the monetized value of education and health do not contribute to the reduction of the urban-rural gap in the Spanish context.