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Understanding Italian inequality trends: a simulation-based decomposition

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  • Carlo Vittorio FIORIO

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.

Suggested Citation

  • Carlo Vittorio FIORIO, 2008. "Understanding Italian inequality trends: a simulation-based decomposition," Departmental Working Papers 2008-26, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2008-26
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    More about this item

    Keywords

    Inequality trends; simulation; counterfactual analysis.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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