The Reform of the Minimum Income Scheme in Italy: Distributive Effects

Exploiting an innovative administrative-survey-linked dataset for Italy recording household consumption expenditure, absolute poverty status and receipt of social benefits in 2019 and individuals’ longitudinal working histories, the article investigates the distributive effects of the reform of the Italian minimum income scheme that, starting from January 2024, has replaced the former Reddito di Cittadinanza (RDC) with a new benefit, named Assegno di inclusione (ADI), that only protects some categories of households according to the characteristics of their members. The analysis follows three prospects: (i) inquiring who are winners and losers from the reform; (ii) evaluating the effects of the reform on absolute poverty and consumption inequality; (iii) estimating, on the basis of past working histories, if the choice of excluding some individuals from the ADI coverage is consistent with their actual employability. Our main findings are: (i) 47% of RDC recipient households lose right to ADI after the reform, while a much more limited number of households becomes eligible to ADI; (ii) the share of RDC recipient households excluded by the ADI is high for households made up of non-nationals (71.7%), despite the reduction in the residence requirement, for households in absolute poverty (40.6%) or where at least a member is a worker (57.2%); (iii) the reform increases absolute poverty and consumption inequality; (iv) no statistically significant differences in past working histories emerge between RDC recipients excluded from the ADI because of categorical requirements and those who satisfy the new requirements.