Achille Vernizzi

On the Gini coefficient normalization when attributes with negative values are considered

Typically, inequality indices appear both as basic concepts in the analysis of welfare economics and as technical tools applied to income or other transferable attributes. Several findings in such research fields are provided by the standard Gini coefficient, traditionally introduced for incomes taking non-negative values. Even if negative income can appear as an unfamiliar concept, it can arise in real surveys, especially when assessing families’ financial assets. The main troubles associated with the treatment of negative income regards the violation of the normalization principle. The inclusion of income taking negative values can yield for the standard Gini coefficient achieving values

Horizontal Inequity Estimation: The Issue of Close Equals Identification

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Carichi di Famiglia nell'Imposta sui Redditi delle Persone Fisiche in Italia e in Europa: Alcune Proposte per l'Italia

>1. The Gini coefficient then has to be adjusted in order to ensure that its range is bounded between 0 and 1. In this paper, a reformulation of the Gini coefficient with respect to that proposed in the literature is presented and discussed in light of the negative income issue. In particular, a new definition of the Gini coefficient normalization term, revealing more coherence with the classical situation of maximum inequality, is provided. Finally, an empirical application based on the Survey of Household Income and Wealth data of the Bank of Italy (2012) further validates the actual attitude of the new Gini coefficient in catching inequality in the distribution of the attribute.

Alcuni effetti della riforma della legislazione fiscale Italiana nei confronti delle famiglie con reddito da lavoro dipendente

Recently van De Van, Creedy and Lambert (2001) and Lambert and Urban (2005) have reconsidered the original Aronson, Johnson and Lambert (1994) decomposition of the redistributive effect in order to properly evaluate personal income tax reforms, when sequential income groups do not concern exact equals. Lambert and Urban (2005) decompose the Atkinson-Plotnick-Kakwani index into three terms. We utilize this decomposition in choosing the optimal bandwidth and suggest to consider not only the highest vertical contribution to the redistributive effect, but also the horizontal inequity due to the reranking of the mean post-tax income among groups. Findings are applied to Italian data with respect to both individual nominal incomes and equivalent household incomes

On measuring violations of the progressive principle in income tax systems

This paper focuses on the estimation of horizontal inequity, remaining within the framework of the close equals groups approach started by Aronson, Johnson and Lambert (1994), and systematised by Urban and Lambert (2008). Within the framework of the close equals groups the choice of bandwidth, which determines the intervals of close equal income units, is fundamental. Following the existing literature on the redistributive effect decomposition, we propose a new criterion for the identification of the optimal bandwidth: in this article the identification of close equals groups is mainly oriented to the estimation of horizontal inequity. Our criterion intends to be a contribution to empirical work that focuses on comparing the effects of different tax systems on a particular population of taxpayers. In order to test the robustness of the new criterion, different tax systems, characterised by different degrees of tax progressivity, are applied to Italian and Polish personal income tax data. Our results suggest the bandwidths, chosen according to our methodology, are more stable than those obtained by maximising potential vertical effects.

Estimating the Cost of Children Through Engel Curves by Different Good Aggregates

Recently van De Van, Creedy and Lambert (2001) and Urban and Lambert (2008) have reconsidered the original Aronson, Johnson and Lambert (1994) decomposition of the redistributive effect in order to identify the optimal bandwidth that should be used in decomposing the redistributive effect, when groups with close pre-tax incomes are considered. The methodology proposed by van De Van, Creedy and Lambert (2001) suggests choosing as the optimal bandwidth the one which maximizes the ratio between the potential effect V (which depends on the bandwidth) and the actual redistributive effect RE (which is invariant). Urban and Lambert (2008) discuss a set of further possible decompositions of the redistributive effect together with a decomposition of the Atkinson-Plotnick-Kakwani index into three terms. Making use of a microsimulation model based on microdata provided by the Bank of Italy in its Survey on Households Income and Wealth in the year 2006, in this paper we investigate the three most important decompositions of the redistributive effect applied to the 2006 and 2007 Italian personal income tax. Moreover, we throw some more light on the behavior of these decompositions in order to look for criteria to choose a bandwidth which allows the three different definitions of potential redistributive effect to assume values which can be as coherent as possible, and, in the meanwhile, to catch as much as possible of the potential vertical effect. We suggest looking for the bandwidth where the ratio between the maximum distance among the different potential vertical effect definitions and the minimum among the different potential vertical effects is minimum.