In the period 1995-2014 Italian families have experienced two different phases: one of moderate growth and one of sharp decline in their economic well-being. The first stopped with the outbreak of the financial crisis in 2007-2008, the second continued until 2012-2013. 2014 saw a reduction in the slowdown. Overall, however, the family disposable income in 2014, in real terms, was 1995% lower than in 8.4; if corrected for household composition, the 2014 income is instead equal to the 1995 level.
After seven years of the fall of disposable income (2007-2014), corresponding to a loss in real terms of 10.6%, the national accounts data indicate the first signs of recovery for 2015 (+0.7%); in 2016 Promethea expects a further recovery, with growth of 2.4%.
At the end of 2015, the Bank of Italy made available the microeconomic data of theSurvey on household budgets (IBF) of 2014, which we use to analyze the trend of family disposable income in the period 1995-2014. In line with national accounts data, households' average disposable income began to fall in 2008, following a downward trend until 2014: between 2006 and 2014, Italian households suffered a loss, in real terms, equal at 15.1%. 2010-2012 was the period of greatest loss, -12.4%; between 2006 and 2008 the fall was 3.6% while in 2008-2010 it was 0.6%. The first weak signs of recovery were observed between 2012 and 2014, with growth of 0.4%.
However, when family incomes are analysed, the number of households and their composition must also be taken into account. This is why reference is made to a “abstract” income, the equivalent income, which makes the incomes of different families comparable. The average equivalent income fell by 14.3% between 2006 and 2014, with a sharp decline in 2008-2010 (-10.9%). In contrast to disposable income, the equivalent income saw a reduction (-1.3%) also in 2012-2014, a consequence of the increase in the average family number for the first time in many years. However, the equivalent income has never fallen, over the analyzed period, below the 1995 value, while the average disposable income in 2014 is 1995% lower than the 8.4 value in real terms.
The breakdown by quintile illustrates the contributions of the various parts of the income distribution to the evolution of average income over time. The positive growth rates of the period 1995-2006 are supported by growth of all quintiles (no level of income excluded, therefore), just as the decline between 2006 and 2012 is determined by the fall of all quintiles. In this case, however, the first quintile - the poorest of the population - appears to have contributed most significantly to the contraction in total income. In the last two-year period 2012-2014 the picture became composite: the income of the poorest quintile continued to fall (-5.7%), together with the second (-0.9%) and the last (-2.9%). The incomes of the medium-high part of the distribution (third and fourth quintile) instead show slight signs of recovery (+1.2 and +0.6% respectively).
Even looking at the different ages, a general fall in equivalised income can be observed in the period 2010-2014, including the older class, which reflects the decline in pension income. The youngest (ages 20-34) experienced a loss in real terms of 2010% between 2014 and 15.7, below the 12.3% level compared to 1995. Even the intermediate classes (35-44 and 45-54) had in 2014 equivalent average incomes below the 1995 level, by 2.9% and 5.9% respectively. The heaviest loss seems to be that of 55-64 year olds, who lost 2012% in the last two years (2014-5.3). However, the incomes of the two older age groups are the only ones that in 2014 are at a higher level, in real terms, than in 1995.
On average, however, incomes experienced variation in levels between groups. In 1995 the equivalent incomes of the younger class (20-34) were about halfway between the incomes of the 35-44 and 45-54 classes but higher than those over 65. Instead, starting from 2006 they become, on average, the lowest, widening the gap with the 55-64 age group, which over the whole period receives the greatest equivalent income: the distance has more than tripled, going from -7.7% in 1995 to -27.7% in 2014.
