DP2140 | Is the Kuznets Curve Still Alive? Evidence from Italy's Household Budgets, 1881-1961

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This paper investigates secular changes in the distribution of personal expen-diture in Italy over the period 1881-1961. To do so, the authors constructed a new dataset, the Italian Household Budgets Database (IHBD), consisting of 4,370 family-level budgets. Methodologically, this paper improves upon most existing studies in that: (i) the entire distribution of the expenditure curve is in-vestigated, rather than just sections or likely determinants of it; (ii) confidence intervals are attached to the point estimates (Gini coefficients); and (iii) signifi-cance tests ascertain that the estimated path of inequality is not due to sam-pling variation. The secular trend in consumption expenditure inequality is found to be downward sloped. Inequality declines sharply at the beginning of the century, increases during the great depression, and falls again thereafter. These findings cast considerable doubt on the existence of an inverted-U shaped Kuznets curve, as far as the Italian case is concerned.