The minimum guaranteed income in an Italian province: the effect of capping the benefit

This paper examines the impact of capping benefits under the Minimum Guaranteed Income programme in an Italian province. The study uses a regression kink design to estimate the impact of capping the benefit at 950 on household and individual outcomes. The results show that capping the benefit did not significantly affect total household expenditure or expenditure on specific categories such as food and durable goods. However, it did increase the economic vulnerability of those with their benefit capped, as evidenced by a higher likelihood of indebtedness and greater difficulty in making ends meet. Furthermore, while having the benefit capped did not affect social interactions, it stimulated labour market participation, although this increase in activity does not translate into higher employment rates. These findings suggest that while capping the benefit of large and low-income households entitled to larger cash transfer may generate cost savings, it may not be as effective in reducing the financial strain on them. The study provides valuable insights for the design and implementation of welfare programmes, highlighting the need for carefully balancing funding constraints and the well-being of low-income households.