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The Gini index and the new maps of inequality in Italy

The Gini index and the new maps of inequality in Italy
The Gini index and the new maps of inequality in Italy

Income inequality is higher in the South than in the rest of Italy, says the latest Istat report, especially before but also after the public redistribution intervention. The data, relating to 2020, show that in Italy the Gini index is equal to 44.3% for primary income, i.e. before monetary transfers by the State and taxation.

The Gini index of income is an indicator that measures how concentrated they are in a certain number of people. It is zero when the incomes are distributed in a perfectly equal way among the subjects, and 100 when there is maximum inequality.

Public intervention significantly reduces inequality, dropping the Gini index by 14.1 points and bringing it, after public transfers and taxation, to 30.2%. In this, transfers weigh much more in reducing inequality than taxes and contributions, and lead to a decrease in inequality of 10.5 and 3.6 points respectively.

Primary income inequality is significantly higher in the South (46.5) compared to the Center (42.1) and the North (40.7), underlines the institute: “the geography of inequality reflects the different diffusion in the territory of single-income families characterized by a low participation of young people and women in the labor market. The redistributive effect is relatively more important in the South, where transfers and withdrawals determine a reduction in inequality from 46.5 to 29.6 points. Nonetheless, the inequality of disposable income remains significantly different between geographical areas, even after public intervention ”.

As a poor area, the South receives a large share of public transfers from other richer areas, and this reduces its inequality sharply, making it decrease by about 12 and a half points. A further decline of 4.3 points then comes from taxation, ie taxes and social security contributions. To make a comparison, the reduction in inequality resulting from public intervention in the various geographical areas leads respectively to a drop in the Gini index of 16.9 points in the south, 14.2 in the center and 12.4 in the north, against a Italian average of 14.1 points.

The Istat analysis also focuses on the impact of the extraordinary measures to mitigate the economic effects of the pandemic, finding that as regards the reduction of poverty it was “more relevant in the north-west (-4.8 percentage points) compared to other areas of the country. In the south, the risk of poverty remains considerably high even if the extraordinary intervention for Covid-19 has reduced the risk of poverty in the South by 2.1 percentage points and by one point in the Islands “.

A possible explanation can be in the greater presence of the underground economy in the South, which makes it more difficult to design measures that can have a significant impact. For example, if a measure is envisaged for a certain group of male or female workers, but they are nowhere to be found because they are employed illegally, their situation becomes complicated.

From the point of view of incomes, we will have to wait a little longer to get precise numbers and understand exactly which areas were affected the most. In the meantime, however, we can draw some conclusions from an extraordinary survey conducted by the Bank of Italy after the first wave, according to which 16.6% of southern families have seen their income fall by more than 50%, against 15% of the center and 13.5% of the north. For another 17.4% in the south, income fell between 25 and 50%, again higher than in the north (15.9%) but lower in the center (23.4%). In those months, on the other hand, 1.6% of households in the north saw their income grow against 0.6% in the center and 1% in the south.

Almost 40 percent of the indebted individuals“, Bankitalia recalled,”declares having difficulty in sustaining the mortgage payments due to the crisis; the altitude is higher in the center and in the south. Only a third of those who are in difficulty with the payment of the mortgage installments have appealed or intend to resort to the mortgage moratorium. Among those who have a loan for consumer credit, the percentage of individuals in difficulty with the payment of the installment is 34 percent“. 18.3% of southern families said they could only meet essential expenses for one month, drawing on their liquidity, and 42.8% for less than three months. Again higher values ​​of several points both in the center and in the north.

Even before the crisis, the Southern economy was suffering, and according to the same survey over 16% of families said they reached the end of the month “with difficulty” or “with great difficulty“. In other areas of the country, 11-12% of families said the same.

These are the known effects of the first wave, with the subsequent brief recovery and then the arrival of the second and even more serious wave of winter 2020. In some time the data will arrive that will take into account the effect of the whole year on incomes , which we can use to make better accounts locally.

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