A dwindling middle class? Italian evidence in the 2000s

In recent years, increasing attention has been paid to household impoverishment in Italy. Most of previous analyses dealing with this issue are based on summary statistics, which may not capture the whole income distribution. This paper employs a non-parametric tool, the "relative distribution", to describe patterns of changes in the entire Italian household income distribution over the period 2000-2004. This approach also allows for a decomposition of the relative density to isolate changes due to differences in location from changes due to differences in shape, thus enabling deeper analysis of income polarization. During the 2000s there was a significant location effect, and also increased income polarization, which has particularly affected incomes below the median. Analyses by social groups, according to the employment status of the household head, show significant re-distribution effects within groups.