[{"data":1,"prerenderedAt":832},["ShallowReactive",2],{"\u002Fdisposable-income-economic-decline-italy":3},{"id":4,"title":5,"body":6,"date":811,"description":812,"extension":813,"meta":814,"navigation":815,"ogImage":816,"path":817,"published":815,"robots":816,"schemaOrg":818,"seo":826,"sitemap":827,"stem":830,"__hash__":831},"content\u002Fdisposable-income-economic-decline-italy.md","Disposable Income and Economic Decline in Italy",{"type":7,"value":8,"toc":797},"minimark",[9,14,18,21,224,227,230,236,239,244,247,259,264,268,271,274,279,288,292,299,302,308,314,320,324,327,330,334,337,340,344,347,350,354,357,360,364,379,390,585,595,600,604,607,610,766,769,773],[10,11,13],"h1",{"id":12},"disposable-income-in-italy","Disposable Income in Italy",[15,16,17],"p",{},"The standard measure economists use, \"disposable income\", is income after taxes. It tells you how much money a household has to spend. It does not tell you how much of that money is actually free, because it does not subtract the costs you cannot avoid: rent, food, electricity, heating, water. Once you subtract those, what remains is what people actually have to make decisions with.",[15,19,20],{},"I wanted to look at that number for Italy over the past four decades. The formula is straightforward:",[22,23,27],"div",{"className":24},[25,26],"py-6","text-center",[15,28,29],{},[30,31,34,77],"span",{"className":32},[33],"katex",[30,35,38],{"className":36},[37],"katex-mathml",[39,40,42],"math",{"xmlns":41},"http:\u002F\u002Fwww.w3.org\u002F1998\u002FMath\u002FMathML",[43,44,45,72],"semantics",{},[46,47,48,52,56],"mrow",{},[49,50,51],"mtext",{},"Index",[53,54,55],"mo",{},"=",[57,58,59,70],"mfrac",{},[46,60,61,64,67],{},[49,62,63],{},"Income",[53,65,66],{},"−",[49,68,69],{},"Essential expenses",[49,71,63],{},[73,74,76],"annotation",{"encoding":75},"application\u002Fx-tex","\\text{Index} = \\frac{\\text{Income} - \\text{Essential\\ expenses}}{\\text{Income}}",[30,78,82,111],{"className":79,"ariaHidden":81},[80],"katex-html","true",[30,83,86,91,99,104,108],{"className":84},[85],"base",[30,87],{"className":88,"style":90},[89],"strut","height:0.6944em;",[30,92,96],{"className":93},[94,95],"mord","text",[30,97,51],{"className":98},[94],[30,100],{"className":101,"style":103},[102],"mspace","margin-right:0.2778em;",[30,105,55],{"className":106},[107],"mrel",[30,109],{"className":110,"style":103},[102],[30,112,114,118],{"className":113},[85],[30,115],{"className":116,"style":117},[89],"height:1.2772em;vertical-align:-0.345em;",[30,119,121,126,220],{"className":120},[94],[30,122],{"className":123},[124,125],"mopen","nulldelimiter",[30,127,129],{"className":128},[57],[30,130,134,211],{"className":131},[132,133],"vlist-t","vlist-t2",[30,135,138,206],{"className":136},[137],"vlist-r",[30,139,143,167,178],{"className":140,"style":142},[141],"vlist","height:0.9322em;",[30,144,146,151],{"style":145},"top:-2.655em;",[30,147],{"className":148,"style":150},[149],"pstrut","height:3em;",[30,152,158],{"className":153},[154,155,156,157],"sizing","reset-size6","size3","mtight",[30,159,161],{"className":160},[94,157],[30,162,164],{"className":163},[94,95,157],[30,165,63],{"className":166},[94,157],[30,168,170,173],{"style":169},"top:-3.23em;",[30,171],{"className":172,"style":150},[149],[30,174],{"className":175,"style":177},[176],"frac-line","border-bottom-width:0.04em;",[30,179,181,184],{"style":180},"top:-3.4461em;",[30,182],{"className":183,"style":150},[149],[30,185,187],{"className":186},[154,155,156,157],[30,188,190,196,200],{"className":189},[94,157],[30,191,193],{"className":192},[94,95,157],[30,194,63],{"className":195},[94,157],[30,197,66],{"className":198},[199,157],"mbin",[30,201,203],{"className":202},[94,95,157],[30,204,69],{"className":205},[94,157],[30,207,210],{"className":208},[209],"vlist-s","​",[30,212,214],{"className":213},[137],[30,215,218],{"className":216,"style":217},[141],"height:0.345em;",[30,219],{},[30,221],{"className":222},[223,125],"mclose",[15,225,226],{},"A score of 1.0 means all income is free. A score of 0.0 means income exactly covers essentials and nothing is left. A negative score means essential costs exceed income.",[15,228,229],{},"The essential basket I used: rent (or mortgage), food, utilities (electricity, gas, water). These are the costs a household cannot defer or avoid.",[231,232],"chart",{":data":233,"label":234,"type":235},"{\"labels\":[\"1990\",\"2000\",\"2010\",\"2018\"],\"datasets\":[{\"label\":\"Saving rate (%)\",\"data\":[16,12,7,3]}]}","Italy net household saving rate 1990–2023","line",[15,237,238],{},"The line goes in one direction. Sixteen percent in 1990. Three percent by 2018. A household that once kept a sixth of its income is now keeping almost nothing.",[240,241,243],"h2",{"id":242},"the-index-over-time","The Index Over Time",[15,245,246],{},"No official Italian dataset tracks exactly this ratio continuously since 1985, so it has to be reconstructed from separate ISTAT and Eurostat series: household gross disposable income, housing cost expenditure, food and non-alcoholic beverage expenditure, and energy and water expenditure. The reconstruction is imperfect but the direction is not ambiguous.",[15,248,249,250,258],{},"In the early 1990s, the Italian net household saving rate sat around 15 to 17 percent of disposable income. By 2010 it had fallen to around 7 percent. By 2018 it was near 3 percent (",[251,252,257],"a",{"href":253,"rel":254,"title":256},"https:\u002F\u002Fec.europa.eu\u002Feurostat\u002Fdatabrowser\u002Fview\u002Ftec00131\u002Fdefault\u002Ftable",[255],"nofollow","Eurostat — Household saving rate (tec00131)","Eurostat, dataset tec00131","). The saving rate is not the same as the index above, but it is a direct consequence of the same squeeze: when essential costs consume a larger share of income, the leftover that can be saved contracts.",[231,260],{":data":261,"label":262,"type":235,":options":263},"{\"labels\":[\"1990\",\"1995\",\"2000\",\"2005\",\"2010\",\"2012\",\"2015\",\"2018\",\"2020\",\"2022\"],\"datasets\":[{\"label\":\"Saving rate (%)\",\"data\":[16,15,12,10,7,5,5,3,15,7],\"fill\":false,\"tension\":0.3}]}","Italy net household saving rate, % of disposable income — Eurostat tec00131","{\"scales\":{\"y\":{\"title\":{\"display\":true,\"text\":\"%\"}}}}",[240,265,267],{"id":266},"what-happened-to-wages","What Happened to Wages",[15,269,270],{},"Between 1991 and 2022, real wages in Italy fell by approximately 2.9 percent. Germany's rose 34 percent in the same period. France gained 31 percent. Spain, which entered the decade in poor shape, still managed a 6 percent real increase. The OECD tracked 38 countries; Italy was one of three where workers ended the period earning less in real terms than when it started.",[15,272,273],{},"The average Italian employee takes home roughly €1,480 net per month (ISTAT, 2023). That figure has moved slowly for a decade. The problem is not that it is low in absolute terms; the problem is that rent, food, and utilities kept rising while wages did not.",[231,275],{":data":276,"label":277,"type":235,":options":278},"{\"labels\":[\"1991\",\"1995\",\"2000\",\"2005\",\"2010\",\"2015\",\"2018\",\"2022\"],\"datasets\":[{\"label\":\"Italy\",\"data\":[100,99,101,100,99,98,98,97],\"tension\":0.3},{\"label\":\"Germany\",\"data\":[100,101,101,100,105,113,118,134],\"tension\":0.3},{\"label\":\"France\",\"data\":[100,102,105,108,112,116,119,131],\"tension\":0.3},{\"label\":\"OECD average\",\"data\":[100,102,106,110,114,118,122,128],\"tension\":0.3}]}","Real wage index 1991–2022 (1991 = 100) — OECD Employment Outlook","{\"scales\":{\"y\":{\"title\":{\"display\":true,\"text\":\"Index (1991 = 100)\"}}}}",[15,280,281,282,287],{},"Among eurozone members, Italy and Greece are the only two countries where real wages ended lower than they started over this period. Italy holds the worst figure in the G7 at -2.9 percent (",[251,283,286],{"href":284,"rel":285,"title":286},"https:\u002F\u002Fwww.oecd.org\u002Fen\u002Fpublications\u002Foecd-employment-outlook-2023_08785bba-en.html",[255],"OECD Employment Outlook 2023","). Every other eurozone country posted real wage growth, several of them above 20 percent.",[240,289,291],{"id":290},"the-essential-basket","The Essential Basket",[15,293,294,298],{},[295,296,297],"strong",{},"Rent."," This is where most of the compression happened in urban areas. A one-bedroom apartment in Milan averaged €1,400 to €1,700 per month in 2024. The average net monthly salary in Lombardy, the wealthiest region in the country, is around €1,700. Rent alone can equal a full salary. Rome is slightly cheaper; Turin is cheaper still; but the salary gradient between cities does not fully offset the rent gradient.",[15,300,301],{},"The EU-SILC survey reported that in 2022, 10 percent of Italian households spent more than 40 percent of their income on housing costs. That threshold is the EU's definition of housing cost overburden.",[231,303],{":data":304,"label":305,"type":306,":options":307},"{\"labels\":[\"2010\",\"2012\",\"2014\",\"2016\",\"2018\",\"2020\",\"2022\"],\"datasets\":[{\"label\":\"Italy\",\"data\":[8.0,8.4,9.0,9.2,9.7,9.5,10.0]},{\"label\":\"EU average\",\"data\":[10.9,11.0,11.4,10.7,10.1,9.6,9.3]}]}","Italy housing cost overburden rate, % of population — EU-SILC \u002F Eurostat","bar","{\"scales\":{\"y\":{\"title\":{\"display\":true,\"text\":\"% of population\"},\"min\":0}}}",[15,309,310,313],{},[295,311,312],{},"Utilities."," Electricity and gas bills for Italian households rose roughly 130 percent between 2021 and 2022, per Eurostat energy price data. This was partly a European-wide event driven by gas prices after the Russian invasion of Ukraine, but Italy's exposure was higher than the EU average because the country had not diversified its energy supply sufficiently. The increase was not temporary in full; prices dropped from the 2022 peak but settled above pre-2021 levels.",[15,315,316,319],{},[295,317,318],{},"Food."," Food CPI in Italy grew 12.6 percent in 2022 and a further 8.8 percent in 2023, per ISTAT. A household spending €400 per month on food in 2021 spent roughly €453 in 2022 and €493 in 2023 on the same basket, before any behavioral adjustment.",[240,321,323],{"id":322},"the-compound-effect","The Compound Effect",[15,325,326],{},"Each of these components is significant on its own. Combined, they describe a household whose fixed costs rose sharply while income did not. The index formula makes the direction concrete: if income stays at 1000 and essential costs rise from 400 to 600, the index drops from 0.60 to 0.40. That is not a marginal deterioration. It is a third of discretionary space gone.",[15,328,329],{},"For the households already near the margin in 2019, the 2022 to 2023 inflation cycle was not an inconvenience. Several consumer association surveys from those years reported Italian households cutting restaurant meals, postponing medical visits, and reducing car use not from preference but from budget constraint.",[240,331,333],{"id":332},"why-wages-did-not-keep-up","Why Wages Did Not Keep Up",[15,335,336],{},"Wages follow productivity over long periods. Italy's labor productivity growth was near zero from 2000 onward. The country entered the euro with high public debt and a wage-setting structure, mostly national collective contracts, that adjusted slowly. When inflation arrived fast in 2021 to 2023, contracts signed before the spike did not carry automatic adjustment. Workers on multi-year agreements absorbed the real loss until the next round of negotiations.",[15,338,339],{},"The tax burden on labor made the gap wider. Italy's combined employer and employee social security contributions (INPS) plus IRPEF produce a wedge between what employers pay and what workers receive. A gross salary of €30,000 costs an employer around €39,000 all in; the worker receives around €19,000 to €20,000 net. The wedge eats the middle. There is limited room to raise net pay without also raising gross cost.",[240,341,343],{"id":342},"where-the-index-sits-now","Where the Index Sits Now",[15,345,346],{},"A precise reconstruction of the index for a median Italian household in 2024 requires data that ISTAT publishes with a lag, but the components point toward a score well below 0.40, meaning essential costs consume more than 60 percent of income for many households. For renters in Rome or Milan the number is worse.",[15,348,349],{},"The households with mortgages signed before 2022 on variable rates faced an additional compression: the ECB rate cycle that began in 2022 raised monthly payments by hundreds of euros for variable-rate borrowers. Fixed-rate borrowers were insulated from that specific shock but had locked in at spreads that were historically not low.",[240,351,353],{"id":352},"the-long-view","The Long View",[15,355,356],{},"The index did not fall in a single event. It compressed across three decades through the combination of wage stagnation, urban housing appreciation, energy exposure, and a tax structure that takes the largest share from middle-income employment. The 2022 inflation spike accelerated a trend that was already visible in the saving rate data from 2010 onward.",[15,358,359],{},"What would reverse it is a different article. The mechanics of the decline are the subject of this one, and they are not complicated: costs went up, wages did not, and the gap between them is what people actually live inside.",[240,361,363],{"id":362},"a-note-on-the-index-construction","A Note on the Index Construction",[15,365,366,367,373,374,378],{},"No historical series for this exact ratio exists. ",[251,368,372],{"href":369,"rel":370,"title":371},"https:\u002F\u002Fwww.oecd.org\u002Fen\u002Fdata\u002Findicators\u002Fhousehold-disposable-income.html",[255],"OECD — Household disposable income","OECD",", ",[251,375,377],{"href":253,"rel":376,"title":256},[255],"Eurostat",", and ISTAT publish household disposable income, housing expenditure, food expenditure, and energy costs as separate series. Nobody publishes them pre-combined into a single affordability index going back to 1985.",[15,380,381,382,385,386,389],{},"Economists more commonly report the inverse, the share of income consumed by necessities, sometimes called the ",[295,383,384],{},"cost burden"," or ",[295,387,388],{},"necessities-to-income ratio",". The index used here is simply one minus that:",[22,391,393],{"className":392},[25,26],[15,394,395],{},[30,396,398,441],{"className":397},[33],[30,399,401],{"className":400},[37],[39,402,403],{"xmlns":41},[43,404,405,438],{},[46,406,407,409,411,415,417],{},[49,408,51],{},[53,410,55],{},[412,413,414],"mn",{},"1",[53,416,66],{},[57,418,419,435],{},[46,420,421,424,427,430,432],{},[49,422,423],{},"Housing",[53,425,426],{},"+",[49,428,429],{},"Food",[53,431,426],{},[49,433,434],{},"Utilities",[49,436,437],{},"Disposable Income",[73,439,440],{"encoding":75},"\\text{Index} = 1 - \\frac{\\text{Housing} + \\text{Food} + \\text{Utilities}}{\\text{Disposable Income}}",[30,442,444,465,485],{"className":443,"ariaHidden":81},[80],[30,445,447,450,456,459,462],{"className":446},[85],[30,448],{"className":449,"style":90},[89],[30,451,453],{"className":452},[94,95],[30,454,51],{"className":455},[94],[30,457],{"className":458,"style":103},[102],[30,460,55],{"className":461},[107],[30,463],{"className":464,"style":103},[102],[30,466,468,472,475,479,482],{"className":467},[85],[30,469],{"className":470,"style":471},[89],"height:0.7278em;vertical-align:-0.0833em;",[30,473,414],{"className":474},[94],[30,476],{"className":477,"style":478},[102],"margin-right:0.2222em;",[30,480,66],{"className":481},[199],[30,483],{"className":484,"style":478},[102],[30,486,488,492],{"className":487},[85],[30,489],{"className":490,"style":491},[89],"height:1.4133em;vertical-align:-0.4811em;",[30,493,495,498,582],{"className":494},[94],[30,496],{"className":497},[124,125],[30,499,501],{"className":500},[57],[30,502,504,573],{"className":503},[132,133],[30,505,507,570],{"className":506},[137],[30,508,510,527,535],{"className":509,"style":142},[141],[30,511,512,515],{"style":145},[30,513],{"className":514,"style":150},[149],[30,516,518],{"className":517},[154,155,156,157],[30,519,521],{"className":520},[94,157],[30,522,524],{"className":523},[94,95,157],[30,525,437],{"className":526},[94,157],[30,528,529,532],{"style":169},[30,530],{"className":531,"style":150},[149],[30,533],{"className":534,"style":177},[176],[30,536,537,540],{"style":180},[30,538],{"className":539,"style":150},[149],[30,541,543],{"className":542},[154,155,156,157],[30,544,546,552,555,561,564],{"className":545},[94,157],[30,547,549],{"className":548},[94,95,157],[30,550,423],{"className":551},[94,157],[30,553,426],{"className":554},[199,157],[30,556,558],{"className":557},[94,95,157],[30,559,429],{"className":560},[94,157],[30,562,426],{"className":563},[199,157],[30,565,567],{"className":566},[94,95,157],[30,568,434],{"className":569},[94,157],[30,571,210],{"className":572},[209],[30,574,576],{"className":575},[137],[30,577,580],{"className":578,"style":579},[141],"height:0.4811em;",[30,581],{},[30,583],{"className":584},[223,125],[15,586,587,588,594],{},"The illustrative reconstruction below uses annual ISTAT and Eurostat household expenditure data. The values are estimates, not official figures, but the direction matches what the ",[251,589,593],{"href":590,"rel":591,"title":592},"https:\u002F\u002Fwww.oecd.org\u002Fen\u002Fdata\u002Fdashboards\u002Fhouseholds-economic-well-being-the-oecd-dashboard.html",[255],"OECD — Households' economic well-being dashboard","OECD households well-being dashboard"," shows for Italy across the same period.",[231,596],{":data":597,"label":598,"type":235,":options":599},"{\"labels\":[\"1985\",\"1990\",\"1995\",\"2000\",\"2005\",\"2010\",\"2015\",\"2020\",\"2024\"],\"datasets\":[{\"label\":\"Index (%)\",\"data\":[47,49,46,50,48,45,43,41,37],\"fill\":true,\"tension\":0.3}]}","Estimated disposable income index, Italy 1985–2024 (illustrative)","{\"scales\":{\"y\":{\"title\":{\"display\":true,\"text\":\"% of income remaining after essentials\"},\"min\":30,\"max\":60}}}",[240,601,603],{"id":602},"the-nonlinear-problem","The Nonlinear Problem",[15,605,606],{},"A flat index obscures how much worse each percentage point feels at the bottom. Losing 10 points from 70 percent down to 60 percent is uncomfortable. Losing 10 points from 30 percent down to 20 percent removes what remained of savings, repairs, education, and any buffer against an unexpected expense.",[15,608,609],{},"One way to make this visible is to look at the ratio of essential costs to what is left over, rather than to total income:",[22,611,613],{"className":612},[25,26],[15,614,615],{},[30,616,618,648],{"className":617},[33],[30,619,621],{"className":620},[37],[39,622,623],{"xmlns":41},[43,624,625,645],{},[46,626,627,630,632],{},[49,628,629],{},"Pressure",[53,631,55],{},[57,633,634,637],{},[49,635,636],{},"Essential Costs",[46,638,639,641,643],{},[49,640,63],{},[53,642,66],{},[49,644,636],{},[73,646,647],{"encoding":75},"\\text{Pressure} = \\frac{\\text{Essential Costs}}{\\text{Income} - \\text{Essential Costs}}",[30,649,651,673],{"className":650,"ariaHidden":81},[80],[30,652,654,658,664,667,670],{"className":653},[85],[30,655],{"className":656,"style":657},[89],"height:0.6833em;",[30,659,661],{"className":660},[94,95],[30,662,629],{"className":663},[94],[30,665],{"className":666,"style":103},[102],[30,668,55],{"className":669},[107],[30,671],{"className":672,"style":103},[102],[30,674,676,680],{"className":675},[85],[30,677],{"className":678,"style":679},[89],"height:1.2834em;vertical-align:-0.4033em;",[30,681,683,686,763],{"className":682},[94],[30,684],{"className":685},[124,125],[30,687,689],{"className":688},[57],[30,690,692,754],{"className":691},[132,133],[30,693,695,751],{"className":694},[137],[30,696,699,725,733],{"className":697,"style":698},[141],"height:0.8801em;",[30,700,701,704],{"style":145},[30,702],{"className":703,"style":150},[149],[30,705,707],{"className":706},[154,155,156,157],[30,708,710,716,719],{"className":709},[94,157],[30,711,713],{"className":712},[94,95,157],[30,714,63],{"className":715},[94,157],[30,717,66],{"className":718},[199,157],[30,720,722],{"className":721},[94,95,157],[30,723,636],{"className":724},[94,157],[30,726,727,730],{"style":169},[30,728],{"className":729,"style":150},[149],[30,731],{"className":732,"style":177},[176],[30,734,736,739],{"style":735},"top:-3.394em;",[30,737],{"className":738,"style":150},[149],[30,740,742],{"className":741},[154,155,156,157],[30,743,745],{"className":744},[94,157],[30,746,748],{"className":747},[94,95,157],[30,749,636],{"className":750},[94,157],[30,752,210],{"className":753},[209],[30,755,757],{"className":756},[137],[30,758,761],{"className":759,"style":760},[141],"height:0.4033em;",[30,762],{},[30,764],{"className":765},[223,125],[15,767,768],{},"At an index of 60 percent, pressure is 0.67. At 40 percent, it is 1.5. At 20 percent, it is 4. The same 10-point drop in the index produces a pressure increase that grows as the index falls. This is closer to what households actually experience: not a proportional reduction in comfort, but a threshold effect where the last margin disappears entirely.",[240,770,772],{"id":771},"sources","Sources",[774,775,776,782,787,792],"ul",{},[777,778,779],"li",{},[251,780,256],{"href":253,"rel":781,"title":256},[255],[777,783,784],{},[251,785,371],{"href":369,"rel":786,"title":371},[255],[777,788,789],{},[251,790,592],{"href":590,"rel":791,"title":592},[255],[777,793,794],{},[251,795,286],{"href":284,"rel":796,"title":286},[255],{"title":798,"searchDepth":799,"depth":799,"links":800},"",2,[801,802,803,804,805,806,807,808,809,810],{"id":242,"depth":799,"text":243},{"id":266,"depth":799,"text":267},{"id":290,"depth":799,"text":291},{"id":322,"depth":799,"text":323},{"id":332,"depth":799,"text":333},{"id":342,"depth":799,"text":343},{"id":352,"depth":799,"text":353},{"id":362,"depth":799,"text":363},{"id":602,"depth":799,"text":603},{"id":771,"depth":799,"text":772},"2026-07-08","A look at how disposable income in Italy has worsened over the years and what that means for everyday life.","md",{},true,null,"\u002Fdisposable-income-economic-decline-italy",[819],{"@type":820,"headline":5,"description":812,"author":821,"datePublished":811,"keywords":825},"Article",{"@type":822,"name":823,"url":824},"Person","Luca","https:\u002F\u002Flucacicada.me","disposable income, italy economy, economic decline, cost of living italy, italian wages",{"title":5,"description":812},{"loc":817,"lastmod":811,"changefreq":828,"priority":829},"monthly",0.6,"disposable-income-economic-decline-italy","6p0IVWaERPZ3eoHeGEo3FHrsoQwbAsT0lAJaWmjIal0",1783508284377]