The "80 Euro" policy: a theoretical and empirical evaluation

Abstract

This work will examine, from a theoretical and empirical perspective, the policy adopted by the Italian Government on April 24, 2014 and known as the "Eighty Euro Tax Rebate". It provided for an automatic tax rebate of € 80 for employees, freelancers, independent contractors and project-based workers with gross incomes between € 8,125 and euro 26,000. This policy affected over 10 million workers and entailed a transfer of euro € 5.823 billion, equivalent to 0.4 percent of the Italian GDP.

The first part will present a general overview of the policy, with a focus on the empirical analysis by Neri et Al. It will also look at the results of the questionnaire issued alongside Italian Central Bank’s Survey of Households Income and Wealth in order to assess the perception and the impact of the policy. The second part will present a brief overview of the economic theory upon which the policy was predicated - according to the transcript of the parliamentary debate. In the last section, a model will be provided to explain the results.