Income inequalities in Italy: trend over time

Transcription

1 Income inequalities in Italy: trend over time Loris Vergolini disuguaglianzesociali.it & IRVAPP Inequality and crisis in Europe Paris 8, Saint-Denis 6 April 2012 Loris Vergolini Income inequalities 1/15

2 Summary 1 Introduction 2 Income inequalities in Italy 3 Regional disparities 4 The crisis effect 5 Conclusion Loris Vergolini Income inequalities 2/15

3 Introduction In this presentation I focus the attention on income inequalities in Italy looking at the following aspects: trend over time; regional disparities; effects of economic crisis. Loris Vergolini Income inequalities 3/15

4 Data and method Data come from the Survey on Household Income and Wealth (SHIW) carried out by Bank of Italy from 1997 to 2010 gathering data on the incomes and savings of Italian households. Over the years, the scope of the survey has grown and now includes wealth and other aspects of households economic and financial behavior. The data will be analyzed using univariate time-series models. In particular I will estimate a counterfactual-like time-series using a double exponential smoothing. Loris Vergolini Income inequalities 4/15

5 Income inequalities In order to measure the level of income inequalities in Italy, I will use two indexes: Gini coefficient: it provides a single statistical measure of the degree of income inequality and it lies between 0 and 1, with perfect equality at zero and income inequality increasing as the Gini coefficient approaches 1. P90/P10 ratio: contrasts the top 10% of earners with the lowest 10%. In this case there is a comparison between two parts of the income distribution (the richest and the poorest). The more unequal are the two parts the greater will be the ratio. Loris Vergolini Income inequalities 5/15

6 Gini index Gini index Year Loris Vergolini Income inequalities 6/15

7 P90/P10 ratio P90/P10 ratio Year Loris Vergolini Income inequalities 7/15

8 Real income trend according to social class Median equivalent income Year Entrepreneurs White collars Working class Social class Managers and professionals Self employed Loris Vergolini Income inequalities 8/15

9 Gini index Gini index Centre-North South and Islands Loris Vergolini Income inequalities 9/15

10 Income ratio (P90/P10) Income ratio Centre-North South and Islands Loris Vergolini Income inequalities 10/15

11 Empirical strategy In order to understand the economic crisis effects on income distribution I rely on a counterfactual-like approach exploiting data at macro level. The aim is to estimate the trends in income inequalities in absence of crisis (double exponential smoothing). The idea is to answer to the following question: What would have been the level of inequalities if the economic crisis had not took place? In other words, I do not know if the observed increase after 2008 is due to the economic crisis or to some long-period trend. Loris Vergolini Income inequalities 11/15

12 Empirical analysis (1) Gini index Year Actual Estimated Loris Vergolini Income inequalities 12/15

13 Empirical analysis (2) Gini index Year Actual Estimated Loris Vergolini Income inequalities 13/15

14 Some conclusive remarks In conclusion, it emerges that Italy is still an unequal country. In particular: in the last teen years we observe an increase in income inequalities in Italy; the income inequality have been magnified by the economic crisis; it persists huge regional disparities (the more disadvantaged areas are the more unequal). Loris Vergolini Income inequalities 14/15

15 THANK YOU VERY MUCH FOR YOUR ATTENTION Loris Vergolini Income inequalities 15/15