Interregional and interpersonal redistribution

Public expenditure and public transfers may address people (personal programmes) or places (territorial programmes), the latter often pursue the territorial redistribution of resources, especially in countries characterised by a significant economic divide, different fiscal capacities and polarised levels of economic development. This paper is conversely interested in the territorial redistributive power of personal public expenditure programmes, that is of public programmes that allocate resources among individuals on the basis of “socio-demographic” features, as opposed to programmes allocating resources across territories according to “territorial” features. Methodologically, this paper develops a case study to better investigate this theoretical issue: it compares the degree of interregional redistribution accomplished in Italy in 1999-2010 by a selection of expenditure programmes with the one that would arise if those expenditure programmes were driven by socio-demographic criteria only. Making use of a regression approach, first we simulate the distribution of total expenditure for each programme across regional territories if these programmes were allocated neglecting the territorial structure and territorial related criteria. Further we use regional fiscal residua to contrast interregional redistribution accomplished by the public budget in two different scenarios. The first scenario is based on actual public expenditure and receipt, while the second makes use of values of expenditure simulated under the hypothesis that only socio-demographic criteria are significant for the distribution of total expenditure across regions. Results show that overall interregional redistribution slightly declines when shifting from actual expenditure to the simulated personal distribution of expenditure, and that this result holds for most public programmes. However, results clearly disclose that even when resources were distributed according to socio-demographic criteria only, public programmes still produce a significant level of territorial redistribution in a country characterised by a stark interregional economic divide, as Italy is.