This paper aims to understand whether a shift towards a more balanced cash transfer and service-based welfare system is valuable in terms of reducing income inequality and what factors mostly contribute to the income inequality evolution. To examine this, I first impute the monetary values of in-kind benefits and then reassess Gini coefficients across countries and welfare regimes. I also compare the role of cash transfers by functions and, more importantly, by how they are allocated. By means of factor source decomposition, the elasticities confirm wages as being the income source that creates most inequalities, while taxes play the most equalising role together with cash transfers. However, universal services such as healthcare and compulsory education outperform most of the cash transfers included in the analysis, with a stronger effect in the Mediterranean countries. Although in-kind services play a marginal role in explaining the changes in the Gini coefficient between 2008 and 2017, results suggest that a coordinated view of cash transfers and public services, as well as increasing the share of non-contributory means tested transfers, can reduce income inequality in all welfare regimes.

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This paper aims to identify how and to what extent the Italian labour market structure, in terms of job composition and institutional changes, shaped the dynamics of wages and wage inequality in the decade between 2007 and 2017. We investigate the main determinants behind the rise in wage inequality in Italy by using Recentered Influence Function (RIF) regressions. This econometric approach allows—on the one hand—to directly assess the effects on the unconditional distribution and on “beyond the mean” statistics, like the Gini coefficient. On the other, it decomposes inequality into endowment and wage effects, following the standard Oaxaca-Blinder technique. We observe that working structures and institutional changes—contractual arrangements (permanent vs temporary contracts) and working hours (full-time vs part-time)—are the main factors in explaining the deterioration in wages at the bottom of the income distribution scale, and the consequent increase in wage inequality.

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