IDEAS home Printed from https://ideas.repec.org/a/gde/journl/gde_v64_n4_p423-464.html
   My bibliography  Save this article

Winners and Losers in the Italian Welfare State: A Microsimulation Analysis of Income Redistribution Considering In-Kind Transfers

Author

Listed:
  • Daniela Sonedda

    (SEMEQ, Università del Piemonte Orientale)

  • Gilberto Turati

    (University of Torino)

Abstract

In this paper we consider income distribution in Italy, and evaluate the redistributive impact of in-kind transfers by using SHIW data provided by the Banca d’Italia. The analysis is conducted at the household level, comparing families with different needs by means of equivalence scales. We consider both cash and noncash income transfers, looking in particular at health services and educational services. Our results show that -in a given year -redistribution in Italy (as in other industrialised countries) is operated mainly through cash transfers, while the redistributive power of in-kind transfers appears to be limited, and their impact on income distribution less than that obtained with direct taxation. Recent pensions reforms will probably reduce cash transfers, and call for new ways of redistributing income.

Suggested Citation

  • Daniela Sonedda & Gilberto Turati, 2005. "Winners and Losers in the Italian Welfare State: A Microsimulation Analysis of Income Redistribution Considering In-Kind Transfers," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(4), pages 423-464, December.
    • Handle: RePEc:gde:journl:gde_v64_n4_p423-464
    as

    Download full text from publisher

    File URL: ftp://ftp.gde.unibocconi.it/gde_articles/2005/GDE_V64_N4_P423-464.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andrea Brandolini, 1999. "The Distribution of Personal Income in Post-War Italy: Source Description, Data Quality, and the Time Pattern of Income Inequality," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(2), pages 183-239, September.
    2. Bruce, Neil & Waldman, Michael, 1991. "Transfers in Kind: Why They Can Be Efficient and Nonpaternalistic," American Economic Review, American Economic Association, vol. 81(5), pages 1345-1351, December.
    3. Valentino Larcinese, 2005. "Personal And Household Income Taxation In A Progressive Tax System: Evidence From Italy," Economics Bulletin, AccessEcon, vol. 8(1), pages 1-9.
    4. Balestrino, Alessandro, 1999. "The Desirability of In-Kind Transfers in the Presence of Distortionary Taxes," Journal of Economic Surveys, Wiley Blackwell, vol. 13(4), pages 333-354, September.
    5. Smeeding, Timothy M, et al, 1993. "Poverty, Inequality, and Family Living Standards Impacts across Seven Nations: The Effect of Noncash Subsidies for Health, Education and Housing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(3), pages 229-256, September.
    6. Boadway, Robin & Marchand, Maurice, 1995. "The Use of Public Expenditures for Redistributive Purposes," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 45-59, January.
    7. Maria Rosaria Marino & Chiara Rapallini, 2003. "La composizione familiare e l�imposta sul reddito delle persone fisiche: un�analisi degli effetti redistributivi e alcune considerazioni sul benessere sociale," Temi di discussione (Economic working papers) 477, Bank of Italy, Economic Research and International Relations Area.
    8. Le Grand, Julian, 1982. "The Distribution of Public Expenditure on Education," Economica, London School of Economics and Political Science, vol. 49(193), pages 63-68, February.
    9. Atkinson, A. B., 1995. "Is the Welfare State necessarily an obstacle to economic growth?," European Economic Review, Elsevier, vol. 39(3-4), pages 723-730, April.
    10. Roland Benabou, 2002. "Tax and Education Policy in a Heterogeneous-Agent Economy: What Levels of Redistribution Maximize Growth and Efficiency?," Econometrica, Econometric Society, vol. 70(2), pages 481-517, March.
    11. Moffitt, Robert, 1989. "Estimating the Value of an In-Kind Transfer: The Case of Food Stamps," Econometrica, Econometric Society, vol. 57(2), pages 385-409, March.
    12. Atkinson, Anthony B., 1995. "The Welfare State and Economic Performance," National Tax Journal, National Tax Association, vol. 48(2), pages 171-98, June.
    13. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    14. repec:ebl:ecbull:v:8:y:2005:i:1:p:1-9 is not listed on IDEAS
    15. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    16. Luigi Cannari & G. D'Alessio, 2002. "La distribuzione del reddito e della ricchezza nelle regioni italiane," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 4, pages 809-848.
    17. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-984, September.
    18. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
    19. Timothy Smeeding & Irwin Garfinkel & Lee Rainwater, 2005. "Welfare State Expenditures and the Redistribution of Well-Being: Children, Elders, and Others in Comparative Perspective," LIS Working papers 387, LIS Cross-National Data Center in Luxembourg.
    20. Massimo Baldini, 2001. "Inequality and Redistribution over the Life-Cycle in Italy: an Analysis with a Dynamic Cohort Microsimulation Model," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 4(2), December.
    21. Sergio Beraldo, 2003. "Fornitura pubblica di beni privati e teoria della tassazione ottimale," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2003(79).
    22. Sergio Beraldo & Daniel Montolio Estivill & Gilberto Turati, 2005. "Healthy, Educated and Wealthy: Is the Welfare State Really Harmful for Growth?," Working Papers in Economics 127, Universitat de Barcelona. Espai de Recerca en Economia.
    23. Pirttila, Jukka & Tuomala, Matti, 2002. " Publicly Provided Private Goods and Redistribution: A General Equilibrium Analysis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(1), pages 173-188.
    24. Vincent Mahler & David Jesuit, 2004. "State Redistribution in Comparative Perspective: A Cross-National Analysis of the Developed Countries," LIS Working papers 392, LIS Cross-National Data Center in Luxembourg.
    25. Margerita Borella, 2004. "The distributional impact of pension system reforms: an application to the Italian case," Fiscal Studies, Institute for Fiscal Studies, vol. 25(4), pages 415-437, December.
    26. Richard Disney, 2004. "Are contributions to public pension programmes a tax on employment? [‘Welfare state and competitiveness’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(39), pages 268-311.
    27. Sutherland, H., 1995. "Static Microsimulation Models in Europe: A Survey," Cambridge Working Papers in Economics 9523, Faculty of Economics, University of Cambridge.
    28. Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September.
    29. Cremer, Helmuth & Gahvari, Firouz, 1997. "In-kind transfers, self-selection and optimal tax policy," European Economic Review, Elsevier, vol. 41(1), pages 97-114, January.
    30. Matti Tuomala & Hannu Tanninen, 2005. "Inherent Inequality and the Extent of Redistribution in OECD Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(1), pages 48-53, 04.
    31. Blomquist, Suren & Christiansen, Vidar, 1995. " Public Provision of Private Goods as a Redistributive Device in an Optimum Income Tax Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 547-567, December.
    32. A. B. Atkinson, 1999. "The Economic Consequences of Rolling Back the Welfare State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011719, December.
    33. Atkinson, Anthony B., 1995. "The Welfare State and Economic Performance," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(2), pages 171-198, June.
    34. Matti Tuomala & Hannu Tanninen, 2005. "Inherent Inequality and the Extent of Redistribution in OECD Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(01), pages 48-53, April.
    35. Le Grand, Julian, 1978. "The Distribution of Public Expenditure: The Case of Health Care," Economica, London School of Economics and Political Science, vol. 45(178), pages 125-142, May.
    36. Hanan G. Jacoby, 1997. "Self-Selection and the Redistributive Impact of In-Kind Transfers: An Econometric Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 32(2), pages 223-249.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Laura Bianchini & Santino Piazza & Alberto Cassone, 2017. "The distributional impact of health public expenditure in Italian regions: what happens when cost-effectiveness and quality matter?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 445-469, December.
    2. Fabio Padovano & Francesco Scervini & Gilberto Turati, 2021. "Comparing governments’ efficiency at supplying income redistribution," Constitutional Political Economy, Springer, vol. 32(1), pages 68-97, March.
    3. Fabio Padovano & Gilberto Turati, 2012. "Redistribution through a "Leaky Bucket". What explains the Leakages?," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2012-03-ccr, Condorcet Center for political Economy.
    4. Fabio Padovano & Francesco Scervini & Gilberto Turati, 2016. "How do Governments Fare about Redistribution? New Evidence on the Political Economy of Redistribution," CESifo Working Paper Series 6137, CESifo.
    5. repec:tur:wpaper:8 is not listed on IDEAS
    6. Francesco Scervini, 2009. "Political Economy of Director's Law: How Sincere Voters Decide on Cash and In-kind Redistribution in a Costly Political Framework," Working papers 08, Former Department of Economics and Public Finance "G. Prato", University of Torino.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Callan, Tim & Keane, Claire, 2009. "Non-cash Benefits and the Distribution of Economic Welfare," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 49-71.
    2. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-383, June.
    3. Luciano G. Greco, 2011. "Optimal Redistribution with Productive Social Services," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 55-73, March.
    4. Simona GRASSI, 2006. "On the characteristics of a mixed system of provision of a private good. An application to health care," Departmental Working Papers 2006-14, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    5. Laura Mayoral & Joan Esteban, 2019. "A politico-economic model of public expenditure and income taxation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 10(3), pages 479-507, November.
    6. Blomquist, Soren & Christiansen, Vidar, 1999. "The political economy of publicly provided private goods," Journal of Public Economics, Elsevier, vol. 73(1), pages 31-54, July.
    7. Gasparini, Leonardo C. & Pinto, Santiago M., 2006. "Equality of opportunity and optimal cash and in-kind policies," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 143-169, January.
    8. Alessandro Balestrino, 2000. "Mixed Tax Systems and the Public Provision of Private Goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 463-478, August.
    9. Balestrino, Alessandro, 1999. "User Charges as Redistributive Devices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(4), pages 511-524.
    10. Hanming Fang & Peter Norman, 2014. "Toward an efficiency rationale for the public provision of private goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(2), pages 375-408, June.
    11. Beraldo, Sergio & Montolio, Daniel & Turati, Gilberto, 2009. "Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(6), pages 946-956, December.
    12. Sören Blomquist & Vidar Christiansen, 2003. "Is there a Case for Public Provision of Private Goods if Preferences are Heterogeneous? An Example with Day Care," CESifo Working Paper Series 938, CESifo.
    13. Sören Blömquist & Vidar Christiansen, 1998. "Price Subsidies Versus Public Provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 283-306, July.
    14. Matthew Greenblatt, 2020. "In-kind transfers and home production," Review of Economics of the Household, Springer, vol. 18(4), pages 1189-1211, December.
    15. Sanghamitra Bandyopadhyay & Joan Esteban, 2007. "Redistributive Taxation and PublicExpenditures," STICERD - Distributional Analysis Research Programme Papers 95, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    16. Blomquist, Sören & Christiansen, Vidar, 2004. "Welfare Enhancing Marginal Tax Rates: The Case of Publicly Provided Day Care," Arbetsrapport 2004:6, Institute for Futures Studies.
    17. J. Amegashie & Bazoumana Ouattara & Eric Strobl, 2013. "Moral hazard and the composition of transfers: theory and evidence from cross-border transfers," Economics of Governance, Springer, vol. 14(3), pages 279-301, August.
    18. Sören Blomquist & Vidar Christiansen & Luca Micheletto, 2016. "Public Provision of Private Goods, Self-Selection, and Income Tax Avoidance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 666-692, October.
    19. Sören Blomquist & Vidar Christiansen & Luca Micheletto, 2010. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 1-27, May.
    20. Blomquist, Soren & Christiansen, Vidar, 1998. "Topping Up or Opting Out? The Optimal Design of Public Provision Schemes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 399-411, May.

    More about this item

    Keywords

    in-kind transfers; income redistribution;

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gde:journl:gde_v64_n4_p423-464. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Erika Somma (email available below). General contact details of provider: http://www.gde.unibocconi.it/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.