The impact of REI on Italian households’ income: A micro and macro evaluation

In 2017, Italy’s government introduced a minimum income scheme, the so-called Income inclusion programme (REI, Reddito di inclusione). REI is a selective, means-tested and conditional scheme that aims at supporting incomes of those more in need. Its structure was recently modified to reach a larger percentage of the poor. In this paper, we simulate the impact of REI on household incomes and evaluate its effects with respect to poverty alleviation and inequality reduction. The analysis is based on the 2015 wave of IT-SILC, the Italian module of European Union Statistics on Income and Living Conditions. Our results show that, under full take-up, REI will reach 45.8% of households in absolute poverty and 22.5% of those in relative poverty. However, it has a mild impact on the incidence of both types of poverty, while it is more successful in reducing their intensity. We also estimate that REI would contribute to raising GDP by 0.14 percentage points through an increase in private consumption.