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Anti-poverty measures in Italy: a microsimulation analysis

Author

Listed:
  • Nicola Curci

    (Bank of Italy)

  • Giuseppe Grasso

    (Luxembourg Institute of Socio-Economic Research (LISER) and University of Luxembourg)

  • Pasquale Recchia

    (Bank of Italy)

  • Marco Savegnago

    (Bank of Italy)

Abstract

Introduced in 2019, the Reddito di cittadinanza (RdC) has replaced the Reddito di inclusione (ReI) as a universal minimum income scheme in Italy. In this paper, we use BIMic, the Bank of Italy’s static (non-behavioural) microsimulation model, to measure the effects of the RdC in terms of inequality reduction and, as a novel contribution, of absolute poverty alleviation. Our results, which do not account for behavioural responses to policy changes, show that the RdC is effective in reducing inequality, and attenuating the incidence, and even more so the intensity, of absolute poverty. We also document how certain features of the design of this benefit affect the distribution of these effects across the population. For this purpose, we simulate two hypothetical changes to the current design of the RdC: one that directs more resources to large households with minors (on average more in need than other households) and the other that takes into account the differences in the cost of living according to geographical areas and municipality size.

Suggested Citation

  • Nicola Curci & Giuseppe Grasso & Pasquale Recchia & Marco Savegnago, 2020. "Anti-poverty measures in Italy: a microsimulation analysis," Temi di discussione (Economic working papers) 1298, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1298_20
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2020/2020-1298/en_tema_1298.pdf
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    References listed on IDEAS

    as
    1. Willem Adema, 2006. "Social Assistance Policy Development and the Provision of a Decent Level of Income in Selected OECD Countries," OECD Social, Employment and Migration Working Papers 38, OECD Publishing.
    2. Koen Caminada & Kees Goudswaard & Olaf Van Vliet, 2010. "Patterns of Welfare State Indicators in the EU: Is there Convergence?," Journal of Common Market Studies, Wiley Blackwell, vol. 48(3), pages 529-556, June.
    3. Currie, Janet, 2004. "The Take-Up of Social Benefits," IZA Discussion Papers 1103, Institute of Labor Economics (IZA).
    4. Massimo Baldini & Elizabeth Jane Casabianca & Elena Giarda & Lorenzo Lusignoli, 2018. "The Impact of REI on Italian Households' Income: A Micro and Macro Evaluation," Politica economica, Società editrice il Mulino, issue 2, pages 103-134.
    5. Luigi Cannari & Giovanni D'Alessio, 2016. "Socio-Economic Conditions and Mortality in Italy," Politica economica, Società editrice il Mulino, issue 2, pages 331-350.
    6. Angus Deaton & Olivier Dupriez, 2011. "Spatial price differences within large countries," Working Papers 1321, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    7. repec:pri:rpdevs:spatial_price_differences_in_large_countries-_10-jul_2011_complete is not listed on IDEAS
    8. repec:bla:jcmkts:v:48:y:2010:i::p:529-556 is not listed on IDEAS
    9. Nicola Curci & Marco Savegnago & Marika Cioffi, 2017. "BIMic: the Bank of Italy microsimulation model for the Italian tax and benefit system," Questioni di Economia e Finanza (Occasional Papers) 394, Bank of Italy, Economic Research and International Relations Area.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Tonutti, Giovanni & Bertarelli, Gaia & Giusti, Caterina & Pratesi, Monica, 2022. "Disaggregation of poverty indicators by small area methods for assessing the targeting of the “Reddito di Cittadinanza” national policy in Italy," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    2. Nicola Curci & Marco Savegnago, 2019. "Shifting taxes from labour to consumption: the efficiency-equity trade-off," Temi di discussione (Economic working papers) 1244, Bank of Italy, Economic Research and International Relations Area.
    3. Nicola Curci & Marco Savegnago, 2021. "A new universal child allowance in Italy: equity and efficiency concerns," Questioni di Economia e Finanza (Occasional Papers) 636, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    microsimulation model; redistribution; poverty; minimum income; progressivity;
    All these keywords.

    JEL classification:

    • 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
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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