Employment Growth, Inflation, and the Distribution of Household Labour Income *

Employment Growth, Inflation, and the Distribution of Household Labour Income * | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Employment Growth, Inflation, and the Distribution of Household Labour Income * Giuseppe Pio Dachille, Antonio Dalla Zuanna, Monica Paiella, Eliana Viviano This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9073032/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 7 You are reading this latest preprint version Abstract We quantify how the employment expansion accompanying Italy’s post-pandemic recovery mitigated the distributional consequences of the contemporaneous surge in prices, which disproportionately affected households at the bottom of the expenditure distribution. Using linked administrative employment records and household survey and expenditure data, we examine labour income dynamics, employment transitions, differential inflation exposure, and the redistributive role of the tax–benefit system for Italian households without pension or self-employment income over 2018–2023. Despite elevated inflation, households in the lowest expenditure quintile experienced gains in real labour income, whereas those higher in the distribution did not. The decline in inequality is driven primarily by employment entry among previously non-employed household members, while adjustments among continuously employed workers played a limited role. Extensive-margin gains reflect stronger demand for low-skilled labour rather than differential labour-supply responses to inflation. Microsimulations indicate that fiscal measures cushioned disposable incomes at the bottom but did not alter the central role of employment growth in shaping distributional outcomes. JEL codes: D31, E24, E31, J21 Inflation Employment growth Labour income Inequality Extensive margin Italy Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Reviews received at journal 12 Apr, 2026 Reviewers agreed at journal 12 Apr, 2026 Reviewers agreed at journal 09 Apr, 2026 Reviewers invited by journal 06 Apr, 2026 Editor assigned by journal 09 Mar, 2026 Submission checks completed at journal 09 Mar, 2026 First submitted to journal 09 Mar, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9073032","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":620426629,"identity":"3212507a-df04-4553-ad2b-8d846250f9ae","order_by":0,"name":"Giuseppe Pio Dachille","email":"","orcid":"","institution":"Istituto Nazionale della Previdenza Sociale","correspondingAuthor":false,"prefix":"","firstName":"Giuseppe","middleName":"Pio","lastName":"Dachille","suffix":""},{"id":620426631,"identity":"e5a19ec3-d0f0-4f1d-ab14-b785cd1f092d","order_by":1,"name":"Antonio Dalla Zuanna","email":"","orcid":"","institution":"Bank of Italy","correspondingAuthor":false,"prefix":"","firstName":"Antonio","middleName":"Dalla","lastName":"Zuanna","suffix":""},{"id":620426634,"identity":"cbef9951-9d17-4bd0-aa94-babcc6c6dcb8","order_by":2,"name":"Monica Paiella","email":"data:image/png;base64,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","orcid":"","institution":"Istituto Nazionale della Previdenza Sociale","correspondingAuthor":true,"prefix":"","firstName":"Monica","middleName":"","lastName":"Paiella","suffix":""},{"id":620426635,"identity":"39cb08b1-dfa9-4a66-a2f2-5aa124ec70ef","order_by":3,"name":"Eliana Viviano","email":"","orcid":"","institution":"Bank of Italy","correspondingAuthor":false,"prefix":"","firstName":"Eliana","middleName":"","lastName":"Viviano","suffix":""}],"badges":[],"createdAt":"2026-03-09 12:39:21","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9073032/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9073032/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":106725928,"identity":"45fbd765-f0c3-42bc-92f5-c4c614b6090c","added_by":"auto","created_at":"2026-04-12 18:34:32","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":630884,"visible":true,"origin":"","legend":"","description":"","filename":"2026march9DaDaPaVi.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9073032/v1_covered_649e8f51-9ca6-43df-9f59-38576f7d7695.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Employment Growth, Inflation, and the Distribution of Household Labour Income *","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"the-journal-of-economic-inequality","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"joei","sideBox":"Learn more about [The Journal of Economic Inequality](http://link.springer.com/journal/10888)","snPcode":"10888","submissionUrl":"https://submission.nature.com/new-submission/10888/3","title":"The Journal of Economic Inequality","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"Inflation, Employment growth, Labour income, Inequality, Extensive margin, Italy","lastPublishedDoi":"10.21203/rs.3.rs-9073032/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9073032/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eWe quantify how the employment expansion accompanying Italy’s post-pandemic recovery mitigated the distributional consequences of the contemporaneous surge in prices, which disproportionately affected households at the bottom of the expenditure distribution. 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