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Evaluating the impact of a Minimum Income Guarantee program in the Province of Trento

Project researchers

In Autumn 2009 a Minimum Income Guarantee (MIG) program has been introduced in the Province of Trento. The introduction of such a program represents a major innovation at the local level but also in the context of the national welfare system: currently in fact in Western Europe only Italy and Greece lack a “safety net” program. The MIG is aimed at tackling poverty in the Province by providing a guaranteed amount to household whose income falls below the poverty line (defined as the 60% of current national median income). The program is means-tested and works by topping households’ income up to a “guaranteed” level, defined according to household composition and circumstances (disability, housing costs for those living in rented accommodation etc.). The introduction of a “safety net” program bears the potential effect of a disincentive to labour supply, both at the extensive (whether to participate or not in the labour market) and intensive margin (the amount of hours worked). Another concern is raised in relation to the type of expenditure of the financial amount received.

The purpose of the project is to produce a timely ex-post evaluation of the Minimum Income Program  implemented in the Province of Trento and the main outcomes evaluated includes: 1) the program effectiveness in reducing poverty; this depends on the actual  proportion of target population that claim and are awarded the benefit (and consequently are lifted out of poverty); 2) the impact on labour supply, both in terms of labour market participation and of hours worked; 3) the impact on household consumption of particular good and services; 4) the impact on social exclusion measured by means of the frequency of social contacts with friends and colleagues.

The data for the evaluation come from an ad hoc panel survey on a sample of recipients and non recipients interviewed before and after the implementation of the programme, in order to measure the possible variations in the outcomes under scrutiny. The causal effects of the policy have been estimated using a strategy based on a difference-in-differences estimator. The results show that the minimum income has had different effects for natives and for non-natives. For what concerns the first group, the measure favoured the contacts with friends and it reduced both the unemployment and activity rates. On the other side, for the non-natives it emerged that the minimum income was able to reduce material deprivation and to increase the consumption for food. It did not have any significant influence on the labour market participation.

Starting from 2014, FBK-IRVAPP started a spin-off project in order to evaluate the effects of a change in the rules of the minimum income. More precisely, the new rules state the maximum amount of the benefit is set to € 950. To evaluate this modification, FBK-IRVAPP carried out another survey having as reference population the recipients around the € 950 threshold. In this case the identification strategy will be based on a regression kink design that allows the identification of causal effects in a situation in which the amount of the benefit shows a change in its slope and not a jump like in the case of regression discontinuity design.

Date: 
2009