Poor Laborers and Rich Capitalists? On the Evolution of Income Composition Inequality in Italy 1989-2016

, Stone Center, Roberto Iacono () and Marco Ranaldi
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, Stone Center: The Graduate Center/CUNY

No xs47p, SocArXiv from Center for Open Science

Abstract: We study the evolution of inequality in income composition in terms of capital and labor income in Italy between 1989 and 2016. We document a rise in the share of capital income accruing to the bottom of the distribution, whilst the top of the distribution increases its share of labor income. This implies a falling degree of income composition inequality in the period considered and, hence, the fact that Italy is moving away from being an economy composed of poor laborers and rich capitalists. This result is robust to the use of different definitions of capital and labor income. A falling degree of income composition inequality implies a weaker link between the functional and personal distributions of income. Therefore, fluctuations in the total factor shares of income are having an increasingly weaker impact on income inequality in Italy. Finally, we conceptualize a rule of thumb for policy makers seeking to reduce income inequality in the long run. This rule relates fluctuations in the total factor shares and the level of income composition inequality to the specific income source to be redistributed. (Stone Center on Socio-Economic Inequality Working Paper)

Date: 2020-03-26
New Economics Papers: this item is included in nep-eur and nep-hme
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Related works:
Working Paper: Sources of Inequality in Italy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:xs47p

DOI: 10.31219/osf.io/xs47p

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