Income and expenditure between generations of Spaniards during a pandemic


CaixaBank Search | The economic crisis triggered by COVID-19 does not affect all groups in the same way, as we have already seen in other articles of the Monthly report since the start of the pandemic. In this article, we will analyze, using the anonymized internal data of CaixaBank, whether significant differences were observed in the incomes and expenses of Spaniards according to the generation to which they belong. In order to draw a portrait of income, we took into account the main sources: the wage bill, unemployment benefits, public pensions, public aid and income from private pension plans. On the consumption side, we looked at card transactions and cash withdrawals from ATMs, as well as direct debits.

Young people hit hardest by COVID-19 crisis

One of the main findings that emerges from the data analysis is that in the three quarters of 2020 that have been affected by the pandemic, the decline in income from one year to the next was much more pronounced among young people (between 18 and 29) than among adults (30 to 64) and the elderly (65 and over), as shown in the first graph.

In fact, the decline in the median income of young people was quadruple that of adults in 2020. On the other hand,, the median income of seniors increased year on year in every quarter of the last year and increased by 1.1% compared to 2019, a logical result given the revaluation of pensions implemented in 2020.

When we analyze the decline in income quarter by quarter (see second graph), it is not surprising that the largest declines for youth and adults occurred in the second trimester (the incomes of seniors, on the other hand, have not suffered), since economic activity was strongly impacted by the confinement, especially in April at the height of the restrictions. In T3, we see that even though adult incomes were still declining in terms from year to year, they were able to recover faster than in the case of young people. Finally, in the fourth quarter, the recovery that began in the incomes of young people and adults was slowed down with the arrival of the second wave of COVID-19; in particular, the largest drop in fourth-quarter earnings was recorded in November, when restrictions were reintroduced across the country to curb the new wave.


Regarding consumption, for each generation, it followed a pattern parallel to that of income. The second trimester is an example: despite the general confinement and affecting all citizens in the same way, the drop in consumption was much more pronounced among young people than among adults, while the drop in consumption was more limited. among seniors. Furthermore, In Q3, when the easing of restrictions coincided with the start of summer, the annual change in consumption is in positive territory for seniors, unlike young people and adults.

Income quintile analysis: it’s not just age that matters

Before concluding, we have studied whether these differences in the evolution of income and expenditure are only due to demographics or whether it is also important to take into account the level of income. The third graph shows the evolution of median income and consumption in 2020 for each generation. and, within each generation, for each income quintile.


When analyzing changes in income, it is clear that income level and age are very important factors. In particular, the drop in incomes of young people in the first income quintile is particularly pronounced, as well as in the case of low-income adults. As one progresses in the quintiles, the decrease in the incomes of young people decreases considerably (in fact, in the top quintile, the annual variation is positive), while only adults in the first quintile see their incomes decrease. . Finally, the elderly have seen their income increase in all quintiles.

The consumption results are also revealing. First, consistent with the data aggregated by generation, young people reduced their consumption more than adults and adults more than seniors, in all quintiles. Second, the decline in consumption among youth and adults was significant in all quintiles, and unlike in the case of income, there is no clear trend of smaller declines as income increases. Third (and this is perhaps the most striking result), we see that for most of the population – adults and the elderly – the largest drops in consumption have occurred among people with higher incomes. This may seem surprising, but it would in fact make sense for people with high purchasing power to devote a greater share of their consumption to the categories of goods which have been most affected by the restrictions – and therefore have fallen the most – by compared to people from other quintiles. This is precisely the conclusion reached by the Bank of Spain in a recent study, finding that the categories of expenditure most affected by confinement – essentially those linked to greater mobility and social interaction, such as transportation services, recreational and cultural services, tour packages, and hotels, cafes and restaurants – account for a larger proportion of the total expenditure of high-income households. This result has important macroeconomic consequences, since people with higher incomes tend to have a lower marginal propensity to consume than those in lower quintiles. This will tend to mitigate the impact of pent-up demand in the post-pandemic recovery

In short, in this article, we found that the big losers from the COVID-19 crisis have been young people, especially those with low income. Low-income working adults have also seen them decimated, while the rest of the adults fare a little better. To finish, the elderly were not affected in terms of income, but they have reduced their consumption, albeit less than adults and young people. These patterns, which coincide with those of other European consumers, allow us to declare with greater conviction that the pandemic is also having a very different impact on each generation in the Spanish national economy.


Julio V. Miller

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