SINGLE UNIVERSAL ALLOWANCE: A DISTRIBUTIONAL ANALYSIS OF THE RECENT ITALIAN CHILD BENEFIT REFORM

Abstract

The Italian child benefit system has seen a transformation that led to the introduction of the single allowance, with the aim of simplifying and making the procedure for transfers to families more efficient. Tax credits and family allowances were abolished together with another series of family bonuses and substituted by this new measure. The aim of my thesis is to demonstrate that the single allowance is more equal and efficient than the previous system. I conducted a microsimulation with the use of the Bank of Italy's 2016 income and wealth survey. I identified who are the beneficiaries and losers of the reform and I showed which income groups will benefit most from the allowance. The effect of the recent introduction of the single allowance has been compared with the previous child benefit system, made mainly of tax credits and family allowance. I estimated the amount of ISEE and single allowance and I analysed its effect on family welfare, comparing it with an estimation of tax credits and family allowance. Then I calculated the equivalent disposable income, I divided it in deciles, and I observed which deciles of income had the major benefits from the single allowance reform. Regarding disability, not having the availability of data from the survey, I hypothesized the amount of child benefits pre and post reform, based on the type of disability and the age of the child for a typical family with a disabled child. In conclusion, the single allowance reaches a major number of families than the old system and the major beneficiaries are low-income groups. It improves fairness between families with and without children and can contribute to reduce poverty among large families. Disabled children of age are penalized by this reform, because for them the benefit was higher with the previous system.