Equalizing or Not? The Effect of Changing Household Characteristics on Income Inequality

Among the various factors which have been explored to explain differences and trends in income inequality, there is one which has received relatively little attention: differences and changes in household characteristics. Using the data from the Bank of Italy Survey of Household Income and Wealth, this article examines the relationship between family demographic and economic characteristics and income inequality. More precisely, it analyses how much and in which direction (boosting vs. containing) recent changes in household forms have affected the level of income inequality in Italy. The analysis shows that the equalizing power of Italian families has decreased in recent decades, and that the most recent changes in household forms do not have a clear equalizing effect. On the other hand, it is also found that the relevance of income differences between household forms in determining the level of income inequality is on the increase.