The Impact of Social Policies on Income Distribution and the Labour Market in Italy

Abstract

Italian social policies are divided between insurance and public assistance, an ambivalence that occasionally results in unequal treatment of equals and discriminatory distribution of benefits. Though expansion of social expenditures slowed after 1975, social programmes did not suffer real cuts until 1983. The effect of social policies on poverty is not direct: most recent changes in the income distribution reflect the effects of recession. Though the Italian share of GDP officially allocated to social expenditures is still below the average of that in other industrialized countries, resources available to the needy are understated because of informal channels within the institutional system. Although the data on income distribution are inadequate, improvements can be discerned in the lowest decile owing to transfer policies targeted on families during the 1970s. In general, the equalizing policies championed by the unions in the 1970s have improved the well-being of wage earners and salaried workers, as well as pensioners.