On the link between functional and personal income distribution in Italy

The main purpose of this chapter is to discuss the link between movements in functional income distribution and the Gini index in Italy over the past twenty years, investigating why personal income distribution appears rather stable and independent of the underlying distribution of national income by factor shares. Section 12.2 presents data on this from the Bank of Italy’s Survey on Household Income and Wealth (SHIW). Section 12.3 discusses the relationship between functional distribution and the SHIW/Gini index identifying some reasons why there 21 could be a de-link between these two dimensions. In Section 12.4 we elaborate evidence on this by decomposing the Gini index by factor components. Section 12.5 discusses how the distributive outlook in Italy has been influenced by the increase in imputed property income as distinct from actual property income. Section 12.6 assesses the role that permutations among income receivers along the income ladder might have exerted in stabilising the Gini index. Section 12.7 concludes.