Economic inequalities in major Spanish cities draw a map of contrasts that have little to do with average income levels. Madrid and Zaragoza today embody the extremes of a phenomenon which is growing and reconfiguring itself after the impact of the pandemic. The first is the most unequal large city in Spain; the second, the most egalitarian, according to the new Fedea report on Personal income of Spanish municipalities and its distribution corresponding to 2022, based on personal income tax microdata from the Tax Agency and published this Thursday.
The Gini index, which measures inequalities in the distribution of personal income, confirms the gap between the two poles in 2022, the last year for which data is available. This indicator, which varies between 0 and 1, makes it possible to measure economic or income inequalities within a population. 0 represents perfect equality (everyone has the same income), while 1 indicates maximum inequality (only one person has all the income).
Madrid, with a median income of 24,440 euros, has a value of 0.5464, the highest among the 10 large Spanish cities, reflecting a very polarized socio-economic structure: professionals with very high incomes concentrated in finance, advanced services and administration coexist with large work segments linked to hospitality, commerce, care and logistics, characterized by low salaries and high heterogeneity. Zaragoza, with a median income of 21,528 euros, has an index of 0.4691, below the Spanish average of 0.5058 points.
The report presents an urban scenario in which the post-pandemic recovery has boosted average income, but has not necessarily reduced internal gaps. In fact, in some cases they have been recalibrated. Between the two extremes of this group of localities are, from greatest to least unequal, Valencia, Málaga, Las Palmas de Gran Canaria, Alicante, Palma de Mallorca and Seville. All with Gini index values above 0.53. Murcia (0.5274) and Barcelona (0.5172) are in a better position.
Why are some big cities more unequal than others? Jorge Onrubia, researcher at Fedea, co-author of the report and professor and doctor in economics at the Complutense University of Madrid, explains that “inequalities within a large city depend on its internal socio-economic composition and the degree of residential segregation”. In larger metropolitan areas, he points out, high-skill jobs and high incomes simultaneously converge with low-skill jobs and much more modest wages, primarily in the service sector, widening internal distances.
In addition, he adds, the high housing prices observed in these cities have an influence, “which tends to expel” part of the population with average incomes to peripheral municipalities and neighborhoods, reinforcing internal segregation between rich and poor neighborhoods. Therefore, he concludes, “the greater the size and diversity of the labor market, the more internal heterogeneity and inequality there is.”
The expert recognizes, however, that there are exceptions: certain large municipalities maintain low inequalities because their labor market is less polarized or because they have more inclusive urban planning, with a more balanced mix of social groups and less land pressure. Even the demographic structure introduces additional nuances: “The degree of aging has an influence, because the average income of retirees is generally significantly lower than that of workers, especially in lower-skilled jobs,” explains Onrubia. Although the researcher does not specify it, in the case of Zaragoza housing is significantly cheaper than in other large cities.
The paradox of rich and poor municipalities
Fedea data also analyzes the paradox that very rich and very poor municipalities can share similar levels of inequality. This is the case of Pozuelo de Alarcón (Madrid), the municipality with the highest average income in Spain, and El Ejido (Almería), one of those with the lowest income.
The case of Pozuelo, with a value of 0.6188, “shows higher inequality,” explains Onrubia. The average income is high, but there are also very notable differences within the municipality between very well-off households (elite areas like La Finca or Somosaguas) and others with more medium-high incomes, more distant, and even low-income areas, frequently inhabited by immigrants or their second-generation national descendants, with less access to skilled jobs. A similar explanation would be given in Alcobendas (0.6889), another upper-middle income town where the famous La Moraleja luxury resort is located.
On the contrary, in low-income municipalities, such as the case of El Ejido, with a value of 0.6322, the explanation would lie in “the existence of population centers with not too high average incomes that coexist with a large population in number, usually immigrants, with jobs in the agricultural sector, in many cases, with high temporality, which widens internal distances”. In all these cases, the coexistence of groups with very different income levels within the same municipality explains their inequality, although for very different socio-economic and urban reasons.
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