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The redistributive effects of in-kind transfers in Italy

Author

Listed:
  • Emanuele Dicarlo

    (Bank of Italy)

  • Marco Savegnago

    (Bank of Italy)

Abstract

In-kind transfers, such as healthcare and education services, represent a substantial portion of public expenditure in most advanced economies, yet they are rarely included in analyses of tax-benefit systems due to the methodological challenges in assessing their monetary value. This paper adds an in-kind transfer module to an otherwise standard microsimulation model of the Italian household sector. Following established methodologies, we evaluate the health, education, childcare, and social housing services enjoyed by each beneficiary. We find that in-kind benefits follow a distinctively U-shaped age profile and are more uniformly distributed across income levels compared to cash benefits. In-kind transfers increase net disposable income by 20 percent, on average, and almost 60 per cent for lower-income households, therefore playing a crucial role in reducing inequality. These results confirm the importance of including in-kind transfers in distributional analyses for a more complete understanding of welfare systems.

Suggested Citation

  • Emanuele Dicarlo & Marco Savegnago, 2025. "The redistributive effects of in-kind transfers in Italy," Questioni di Economia e Finanza (Occasional Papers) 977, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_977_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2025-0977/QEF_977_25.pdf
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    Keywords

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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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