Inequality, welfare policies and macroeconomic sustainability of public finances

Inequality is a complex multidimensional challenge affecting human well-being. It goes beyond the income distribution issue also involving other social elements- health, gender, religion, environment etc.- causing disparities of opportunities which are still widespread within and between countries. In recent decades, several socio-economic factors as the globalisation, the economic crisis, the covid-19 pandemic, the technological development and the massive use of mobile technology, the policy shocks as the Ukrainian war, have contributed to increase inequalities. Against this background, the political need to reduce inequalities, together with the EU public finance constraints, raises the issue of the macroeconomic sustainability of redistributive welfare policies. This book provides a multilevel analysis concerning several domains of inequality with a focus on the macroeconomic sustainability of public finances. In the first Chapter, Antonelli and Salustri present an analysis of social stratification of European countries through a multi-criteria analysis. The authors show a general improvement of the observed performances of social policies in Europe and some degree of convergence of the EU social protection systems in the period 2007-2017. Cross-sectional analysis suggests positive significant correlation between social protection systems and macroeconomic performances. Antonelli and Marini (Ch 2) propose a new composite health status indicator for Italian regions. The analysis of the health status inequality between regions is associated to an empirical analysis on the socio-economic and the policy variables at regional level. The cross-section investigation confirms that health status is correlated to the regional policy framework as the characteristics of the Regional Health Systems. The Ch 3 (Castaldo and De Bonis) contains a twofold empirical analysis. First, the authors test for the existence of a Kuznets curve. Second, they find that the change in the employment share of the high-tech sector is the main driver of the Kuznets swing deriving policy implications. The Ch 4 (Salustri, Locatelli, Apolloni) highlights that, despite the opportunities of innovation and development opened up by the space economy and the space-borne Earth Observations, many regions cannot follow spatial innovation patterns, and that, in turn, may exacerbate inequalities both between and within regions. Germani and Castaldo (Ch 5) propose an empirical investigation on the relationship between economic inequality and environmental crime in Italy showing that, at regional level, economic inequality leads to higher rates of environmental crime. With the adoption of appropriate policies, economic growth may provide an opportunity to increase economic prosperity, lower economic inequality and decrease environmental crime. In Ch 6 De Bonis, on the background of the relationship between public finance constraints and public social spending, highlights the debate on the European fiscal rules. The author points out that, from a theoretical point of view, growth models consider wealth as the pivot variable, while, from a practical one, the debt to GDP ratio alone is not a good predictor of sovereign crises. Within the framework of the macroeconomic sustainability of social public policies, Conflitti and Maggi (Ch 7) provide empirical evidence for the debt management theory in order to smooth deficit over time. The authors present an empirical analysis for the Italian case showing that a mixed composition between short term conventional bonds (small share), long term conventional bonds (large share) and inflation indexed bonds (relevant share) provides an insurance against unexpected macroeconomics shocks.