Understanding Italian Inequality Trends


  • The author is grateful to Frank Cowell, Roberto Artoni, Andrea Brandolini, Daniele Checchi, Massimo Florio, Martin Fournier, Stephen Jenkins and Marco Manacorda for helpful discussions on earlier drafts, to two anonymous referees for their detailed comments and to seminar participants at the London School of Economics, the University of Milan, the University of Modena, ISER, and the 2004 European Economic Association Meeting in Madrid for their feedback. He also thanks the Bank of Italy for providing the data. Usual disclaimers apply.


This article develops a unifying framework for analysing the effects of: (i) the changing distribution of individual incomes by main factor sources, (ii) the increasing participation of wives in the labour force, and (iii) the changing distribution of family types on the distinctive trends towards inequality in equivalent household income in Italy between 1977 and 2004. Changes in the distribution of work and pension incomes explain most of the trend. The higher average likelihood of wage-earning wives had an unequalizing effect on households on the left tail of the income distribution. Little is explained by the changing distribution of family types.