Abstract

This paper simulates the effects of the recent economic crisis on income inequality and poverty in Italy. We impute changes in employment rates estimated from the Labour force survey on the Italian SILC sample. The resulting increase in unemployment benefits is simulated in detail, together with the expansion of the Cassa Integrazione Guadagni, a wage supplement fund that has played a crucial role during the crisis. Our simulations suggest that the crisis has increased inequality and poverty levels, in particular for households with children and for the younger cohorts of workers. We also show that a reform of unemployment benefits towards universalism would have significantly contained these effects.