Essays on the distributional impact of housing in Italy

The inclusion of housing into equivalised disposable income provides a more comprehensive measure of households' well-being. In the literature, two methods of computing housing into income have been proposed: the imputed rent approach and the out-of-pocket approach. Consistent with existing studies, our results indicate that inequality and poverty levels increase after deducting housing costs but decrease when imputed rents are included due to their more equal distribution. Using EU-SILC data from 2007 to 2019 for Italy, we analyse how economic, demographic, income and housing trends contribute to the rise in the share of income spent on housing for the lowest quintile of income. We find that the increase in rent disproportionally impacts low-income households, while increasing income for high net-worth households. Moreover, for low-income households, the rise in housing costs is not accompanied by better housing conditions. Finally, since the imputed rent approach appears to not capture cohabitation economies of scale and higher urban living costs, whereas the out-of-pocket approach does, the paper concludes that the latter seems to be more appropriate for poverty analysis. The aim of this paper is to simulate a recurrent immovable property tax reform to align the outdated cadastral values to market values. In doing that, we develop a static microsimulation model based on the Bank of Italy Survey on Household Income and Wealth (SHIW) for 2020. We analyse the redistributive effects of the current tax system and of the proposed reform, presenting three scenarios. The first is a non-revenue neutral scenario, where the same tax rates as the current property tax apply to the updated cadastral values. The second and third scenarios are budget neutral. The former achieves the revenue-neutrality by solely lowering the tax rates, while the latter reduces the tax rates by less extent, ensuring the budget-neutrality through a lump-sum monetary transfer to low-income households. Our findings indicate that each reform scenario provides a better redistribution and progressivity than the existing tax system. Moreover, our results suggest that in budget-neutral scenarios the gainers outnumber the losers. A well-designed recurrent residential property tax would lower both vertical and horizontal inequality. This contribute investigates the effect of tax credits on housing renovations in Italy, using multi-year cross-sectional data from the Household Budget Survey from 2014 to 2019. We refer to housing renovations as both building interventions (50% tax credit) and energy efficiency retrofitting (65% tax credit). In particular, we examine the consequences of the reform introduced since 2016, which allowed taxpayers with no tax liability to transfer the energy efficiency tax relief on building’s common parts, in lieu of using it to reduce their tax liability. In doing that, we estimate a linear probability model that evaluates the effectiveness and the distributional impact of the reform, controlling for housing and household characteristics, as well as economic and climate factors. We find out that the possibility of credit transfer increases the overall renovation rate and reduces the regressivity of the incentive.