The evolution of income inequality in Italy is different from most of other countries: the Gini coefficient of total equivalised income declined gradually until the late 1980s, grew suddenly during the 1991-1992 recession and remained approximately stable thereafter. In this paper we attempt to explain this trend reversal. We analyse the contribution of the changing distribution of individual incomes by main factor sources (labour income, self employment income, pensions) and by region of origin (North, Centre, South).
We find that pension income and labour income had opposite effects on inequality: changes in the distribution of pension income had an equalising effect while changes in the distribution of labour income and self employment income tended to increase overall income inequality
