The paper analyses the effects of the Reddito di Cittadinanza (RdC, a minimum income scheme introduced in Italy in 2019) on the incidence and the intensity of poverty. Unlike other papers available in the literature, this work focuses on a definition of absolute poverty, based on a comparison between household consumption and a given poverty line. Moreover, the paper discusses the effect of some budget-neutral changes to the rules of this scheme. The analyses are carried out using the BIMic static (non-behavioural) microsimulation model.
The RdC reduces the number of households living in absolute poverty (head count ratio) and, above all, the intensity of poverty (poverty gap). These effects, which do not account for individual responses to policy changes and for economic incentives, are the result of both the large amount of resources devoted to implementing the RdC and its design. A budget-neutral change to the rules of the scheme, to favour large households with minors at the expense of single persons, would make the RdC more effective in fighting absolute poverty.
