Reconstructing Income Inequality in Italy: New Evidence and Tax System Implications from Distributional National Accounts
Journal of the European Economic Association (2023)  [PDF link] [Data link]

With Palagi E., Roventini A., Santoro A.  

In this study we examines income distribution in Italy using a unique combination of survey, tax, and National Accounts data. Findings reveal increased income concentration among the top 1% and 0.1% since 2008, impacting younger individuals, women, and Southern region residents disproportionately. The Italian tax system is mildly progressive up to the 95th percentile but becomes regressive for the top 5% and consistently regressive when considering net wealth.

In search of lost time: An ensemble of policies to restore fiscal progressivity and address the climate challenge
Chapter of: Financing Investment in Times of High Public Debt: 2023 European Public Investment Outlook  [PDF link]

With Palagi E., Faccio T., Roventini A. 

The study explores EU-level tools to enhance fiscal progressivity and secure additional revenue for funding climate policies in a just green transition. Our proposal includes implementing a wealth tax on the top 1%, taxing unrealized capital gains, and raising the minimum corporate tax. Using data on wealth distribution at the EU-Level together with Forbes list data, we estimates that these reforms could yield substantial annual revenue, approximately 1.9%-2.9% of EU GDP. These funds could bolster climate initiatives and diminish inequality, fostering sustainable and inclusive growth across EU economies.

Tackling the regressivity of the Italian tax system: An optimal taxation framework with heterogeneous returns to capital
World Inequality Lab Working Paper 2024/23 [PDF link]

With Dalle Luche M., Palagi E., Roventini A., Santoro A. 

In this paper, we exploit the new data available from the European Central Bank's Distributional Wealth Accounts (DWA) to reconstruct the distribution of capital income in Italy by accounting for heterogenous eturns to capital. With respect to previous estimates, we find that capital income is more concentrated along the income distribution and the Italian tax system is more regressive with lower tax rates hinging on the top 7%.  We show that such rates are remarkably lower than those suggested by an optimal taxation approach and we provide estimates for revenues and inequality reductions that could be attained by applying (higher) optimal rates either to capital income or wealth while controlling for various degree of behavioral responses. These results provide a direction for revenue-increasing and inequality-reducing tax reforms in Italy.

A New Geography of Inequality: Top incomes in Italian Regions and Inner Areas 

Review&Resubmit
Stone Center Working Paper Series. no. 88 [PDF link]

With Morelli S. 

With this work, we estimate top income shares, averages, and thresholds in Italy from the top 10% up to the top 0.1% not only at the National level but for the universe of Italian municipalities for over 20 years. We mainly use tax tabulation data to identify the declared income of the richest individual and then complement it with external information from several data sources such as National Accounts, INPS data, and Population Census. Building on previous work by Alvaredo and Pisano (2010) andthe established methodology of Atkinson (2007), we improve and update older estimates providing a comprehensive analysis of income concentration in the country from 1976 to 2021.

The Impact of Extreme Climate Events on Income Distribution in Italy: A Municipality-Level Analysis
Working-paper coming soon

With Coronese M., Palagi E., Lamperti F., Roventini A. 

This research project aims to estimate the impact of extreme climate events on income distribution at the municipality level in Italy. This will be the first study to examine this issue in Italy and the first country-specific study with such a level of detail for a country other than the United States. We combine ERA5 climate data at the grid level from Copernicus datastore, with income distribution at the municipality level, and ESWD data on climate induced disasters. By analyzing the relationship between extreme climate events and income distribution at the local level, this research has the potential to inform policy decisions related to climate change and social inequality in Italy.

The Legacy of Wealth Inequality 

With Morelli S. 

The Income-Wealth-Emissions Triangle, Evidence from Italy 

With Morelli S., Ranaldi M.