The redistributive effects of in-kind transfers in Italy

Emanuele Dicarlo () and Marco Savegnago ()
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Marco Savegnago: Bank of Italy

No 977, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: In-kind transfers, such as healthcare and education services, represent a substantial portion of public expenditure in most advanced economies, yet they are rarely included in analyses of tax-benefit systems due to the methodological challenges in assessing their monetary value. This paper adds an in-kind transfer module to an otherwise standard microsimulation model of the Italian household sector. Following established methodologies, we evaluate the health, education, childcare, and social housing services enjoyed by each beneficiary. We find that in-kind benefits follow a distinctively U-shaped age profile and are more uniformly distributed across income levels compared to cash benefits. In-kind transfers increase net disposable income by 20 percent, on average, and almost 60 per cent for lower-income households, therefore playing a crucial role in reducing inequality. These results confirm the importance of including in-kind transfers in distributional analyses for a more complete understanding of welfare systems.

Keywords: redistribution; tax-benefit system; in-kind transfers; microsimulation; inequality (search for similar items in EconPapers)
JEL-codes: C15 C63 D31 H2 H22 H23 H24 H31 (search for similar items in EconPapers)
Date: 2025-11
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