Income distribution and the effect of the financial crisis on the Italian and Spanish labour markets

This paper aims at estimating the costs of the current crisis in terms of income distribution and poverty taking into account - by means of microsimulation techniques - the change in employment status in Spain and Italy. We construct a micro simulation analysis on the impact of the crisis on unemployment, household income, and inequality using the European Statistics on Income and Living Conditions Surveys, and Labour Force Surveys data for Italy and Spain with reference to different types of households. We consider the effect of joblessness on household income and well-being and the impact of different systems of unemployment benefit on unemployment sustainability. Our focus is not only on the pecuniary dimension of well-being, but also in terms of the costs of limited access to medical and dental treatment and analyses.JEL Codes: I32, J6, J65