Introduced in 2019, the Reddito di cittadinanza (RdC) has replaced the Reddito di inclusione (ReI) as a universal minimum income scheme in Italy. In this paper, we use BIMic, the Bank of Italy's static (non-behavioural) microsimulation model, to measure the effects of the RdC in terms of inequality reduction and, as a novel contribution, of absolute poverty alleviation. Our results, which do not account for behavioural responses to policy changes, show that the RdC is effective in reducing inequality, and attenuating the incidence, and even more so the intensity, of absolute poverty. We also document how certain features of the design of this benefit affect the distribution of these effects across the population. For this purpose, we simulate two hypothetical changes to the current design of the RdC: one that directs more resources to large households with minors (on average more in need than other households) and the other that takes into account the differences in the cost of living according to geographical areas and municipality size.
The paper presents BIMic, a static and non-behavioural microsimulation model developed at the Bank of Italy. BIMic reproduces the main features of the Italian tax and benefit system, such as social security contributions, personal income tax, property taxes, family allowances and some other social benefits. It aims to evaluate the budgetary impact and distributive effects of tax-benefit programmes. Such programmes may be actually operating at a given point in time or may be a counterfactual set. To illustrate a potential use of BIMic, this paper discusses the distributive impact of a recently approved legislative innovation regarding the additional transfer to pensioners (known as the quattordicesima ai pensionati).
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