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Italy's citizens' income program as a compensatory mechanism. A spatial analysis of regional disparities in welfare policies

Author

Listed:
  • Aiello, Francesco
  • Bonanno, Graziella
  • Errico, Lucia
  • Rondinella, Sandro

Abstract

The "Reddito di cittadinanza" (CIS, Citizens' Income Support) provides cash transfers to low-income households. Its distribution across Italian municipalities exhibits clear geographical concentration and spatial interdependence. Using 2021 municipal data, Spatial Durbin Models show that socio-economic factors significantly influence both CIS participation rates and the amount of support received, with significant spillovers across neighboring municipalities. We find a robust inverse relationship between CIS and municipal spending on social services, consistent with CIS operating as a compensatory mechanism where local social spending is thin, especially in Southern regions. Results are stable across alternative spatial specifications and robust to an IV strategy that treats local social spending as endogenous. While CIS provides short-term relief for vulnerable individuals, persistent regional disparities in social service spending highlight the need for integrated national-local policies to address long-term socio-economic inequalities.

Suggested Citation

  • Aiello, Francesco & Bonanno, Graziella & Errico, Lucia & Rondinella, Sandro, 2026. "Italy's citizens' income program as a compensatory mechanism. A spatial analysis of regional disparities in welfare policies," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 690-708.
    • Handle: RePEc:eee:ecanpo:v:89:y:2026:i:c:p:690-708
    DOI: 10.1016/j.eap.2025.12.032
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    Keywords

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    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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