The fiscal disadvantage of young italians: a new view on consolidation and fairness

This paper explores the inequality related to the lifetime redistributive impact of public sector intervention across living generations. While fiscal policies are typically assessed with respect to the inter-personal dimension of inequality, they may well have heterogeneous impacts across different cohorts, thus raising the issue of intergenerational fairness. We take the case of Italy over the period 1990-2008 to show how such possibly unfair effects can be measured by adapting the methods developed in the context of the generational accounting literature. Importantly, we aim to work on a comprehensive approach, so that reforms involving several taxation and spending programmes, possibly implemented over several years, can be assessed. We find that a significant improvement in public finance sustainability came at the price of an unequal distribution of sacrifices across living generations, with younger cohorts contributing far more over their residual life-cycle.