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Understanding Italian inequality trends: a simulation-based decomposition

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  • Carlo Vittorio FIORIO

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Abstract

By using counterfactual inequality decomposition methods, this pa-per develops a unifying framework for analysing the effects of (i) changing distribution of individual incomes by main factor source (employment, self-employment and pension), (ii) increasing labour force participation of wives and (iii) changing distribution of family types on the peculiar equivalent household income inequality trends in Italy between1977 and 2004. Changes in the distributions of work and pension incomes explain most of the trend, with changing distribution of pension income having an equivalising effect across the whole period. The increased probability of earning wives is found to have had mainly a disequalising effect, mostly concentrated at the lower half of the income distribution. Little is explained by the changing distribution of family types.

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Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2008-26.

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Date of creation: 12 Jul 2008
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Handle: RePEc:mil:wpdepa:2008-26

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Keywords: Inequality trends; simulation; counterfactual analysis.;

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