Session moderated by Mireia Giné, Full Professor of Finance at IESE Business School, Director at WRDS The Wharton School, and Independent Director at Banc Sabadell.
Branko Milanovic, economist specializing in global inequality, former lead economist at the World Bank (1991–2013), and professor at the City University of New York.
José Ignacio Conde-Ruiz, Deputy Director at the Fundación de Estudios de Economía Aplicada and professor at the Complutense University of Madrid.
Laura Hospido, Senior Economist at the Bank of Spain and advisor to the Spanish State Secretariat for the Economy and Business Support.
The session began with an intervention by Branko Milanovic, who discussed key dynamics of global inequality. He noted that global inequality has decreased, largely due to rapid economic growth in countries like China, India, and Indonesia — countries that have been closing the gap with richer nations thanks to their large populations. However, within countries such as Spain and Italy, internal inequality between upper and lower income classes has increased. In Spain, he pointed out, a quarter of the top 10% of earners hold an unusually high concentration of wealth — including capital and wages — a historically rare situation.
Laura Hospido then pointed out that Spain's inequality levels are high compared to other European countries. She explained that inequality is cyclical and heavily tied to employment trends. One important measure, she said, is income volatility: “For 50% of the population in Spain, it’s very difficult to predict their income for the following year.” She also stressed the growing risk of poverty, especially among younger generations.
José Ignacio Conde-Ruiz focused on intergenerational inequality, arguing that today’s young people receive far less political and economic support than previous generations. He observed a decline in per capita income growth and noted that young people have less political power due to their lower electoral weight. He proposed improving productivity as a key solution to raise income and support young people more effectively.
Regarding the effects of technological change, particularly artificial intelligence, Milanovic advocated for more redistributive policies. He argued that AI needs people to become more productive, and since it learns from humans, younger populations — such as those in Africa — have a comparative advantage. In contrast, Europe’s ageing population means the continent may need to rely on immigration, though this is politically challenging.
Solutions Through Public Policy
MG (moderator): Is technology driving local inequality?
BM (Milanovic): AI and new technologies increase the relative weight of capital over labor, which could lead to automatic income growth in certain countries. Europe has the advantage of a well-educated population, which AI needs — but is losing ground due to demographic decline. That loss might be offset by importing people, though this is politically difficult. Africa, with its younger and tech-native population, could become a leader in productivity and innovation.
MG: What about intergenerational inequality?
JICR (Conde-Ruiz): Countries don’t grow — cities do. This forces young people to migrate to large urban centers, causing housing problems. Young people now become independent five years later than in my generation. While housing issues existed in the past, public housing used to be built in large numbers. However, policies were focused on selling, not renting. Today, the solution must be building more — because young people could leave the country, and that would be a serious problem.
MG: What about wealth concentration?
LH (Hospido): Most wealth in Spain is tied to real estate. Inequality in this indicator is rising. In 2020, the top 10% held 43% of all wealth. That share has only grown since.
MG: How is wealth transferred across generations?
JICR: One effect of ageing we are beginning to measure is that people are inheriting wealth later in life. This has two key consequences: inheritance helps access credit and assets. The younger you inherit, the greater your chances of becoming a homeowner, starting a business, or having more children. Wealthier families are increasingly able to make inter vivos transfers (i.e. while still alive), helping their children when needed. Lower-income families cannot afford to do the same.
MG: Has the perception of inequality increased, and does it match the data?
BM: Perception can diverge from actual data — but only up to a point. It cannot do so indefinitely.
MG: What would the best public policies look like?
LH: The most meaningful policies would aim to stabilize employment cycles. For instance, Spain’s most recent labor reform — which directly impacted contract types — moves in the right direction, though it's not enough. When job creation is stable and sustained, inequality drops. Long-term contracts also lead to better access to training. However, poverty remains a major challenge.
JICR: I would propose three general rules: keep structural deficits to a minimum (ideally 0%), introduce a fiscal rule that promotes productivity policies, and ensure continuity of support for future generations. Regarding pensions: Spain’s recent reform significantly increases spending, breaking with previous models. Yes, pensions need to rise, but not disproportionately. Two simple solutions: calculate pensions based on entire working life, and design a long-term care law that works like insurance — helping older people who save excessively out of fear of future dependence.
Branko Milanovic closed the session with a reflection on political instability. He noted that the chart shown at the beginning of the session illustrated well the underlying instability, particularly among large middle classes in Western countries.
