Cash Transfers and Guaranteed Minimum Income Programs:
Research, Evaluation, and Policy
Prague, Czech Republic
September 9-10, 2024
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“Minimum Income Schemes in Italy: Effects on Poverty, Inequality and Labour Supply”
Massimo Aprea, Sapienza University of Rome
From January 2024, a new national minimum income (MI) scheme, the “Inclusion allowance” (ADI) was introduced in Italy, abolishing the former scheme, “Citizenship Income” (RdC), introduced in 2019.
The RdC was actually a MI since recipients had to fulfil income and wealth eligibility criteria in addition to a tight residence condition. Henceforth, apart from the residence requirement, the RdC was based on the principle of “selective universalism”, i.e. according to which all households with insufficient resources are entitled to social assistance whatever the reason for their economic condition. The key novelty of the new ADI scheme is the introduction of a “categorical” eligibility requirement which limits the benefit to households belonging to specific types – i.e. those with at least one minor, one person with disability or one person aged at least 60. Hence, among the households meeting the residence requirement and the means test, only a subset is considered “deserving” social assistance, due to supposed higher difficulties in labour market participation. The reform was admittedly motivated by the willingness of avoiding supposed disincentives in labour supply due to the MI provision to working-age people without care loads, implicitly assuming that individuals’ employability only depends on their household’s composition.
Against this background, we pursue two main aims: i) simulating distributive impacts of the various MI schemes in Italy and ii) testing econometrically labour market effects of these reforms. To these aims, we exploit an innovative dataset, built matching the 2018-2022 waves of the Italian household budget survey (HBS) with the longitudinal information on interviewed individuals available in the National Social Security Institute administrative archives. This dataset perfectly matches the information required for our analysis: HBS records detailed household characteristics and allows to estimate the absolute poverty status; the administrative archives allow us to track the actual RdC receipt and the individuals’ working histories.
As concerns our first aim, we simulate the impact on main indicators of consumption inequality and poverty engendered by the introduction of the RdC and by its replacement with Adi, also highlighting which are the households advantaged or disadvantaged by the reforms.
As concerns our second aim, we focus on labour market outcomes of MI beneficiaries from two complementary perspectives. First, we compare past working histories (i.e. before 2019) of RdC beneficiaries distinguished according to their fulfilment of the new ADI categorical requirements to test whether the choice of excluding some individuals from the MI coverage is consistent with their supposed higher employability. Second, relying on a regression discontinuity design, we compare employment outcomes of RdC recipients and individuals with similar economic conditions who were not eligible to the MI. We thus test whether the recipiency of MI actually disincentivised individuals’ labour supply, by focusing on a set of outcomes as worked weeks, earnings, contractual arrangements, and the attainment of a ‘decent’ job (in terms of duration and wage).