Italy's citizens' income program as a compensatory mechanism. A spatial analysis of regional disparities in welfare policies

The "Reddito di cittadinanza" (CIS, Citizens' Income Support) provides cash transfers to lowincome households. Its distribution across Italian municipalities exhibits clear geographical concentration and spatial interdependence. Using 2021 municipal data, Spatial Durbin Models show that socio-economic factors significantly influence both CIS participation rates and the amount of support received, with significant spillovers across neighboring municipalities. We find a robust inverse relationship between CIS and municipal spending on social services, consistent with CIS operating as a compensatory mechanism where local social spending is thin, especially in Southern regions. Results are stable across alternative spatial specifications and robust to an IV strategy that treats local social spending as endogenous. While CIS provides short-term relief for vulnerable individuals, persistent regional disparities in social service spending highlight the need for integrated national-local policies to address long-term socio-economic inequalities.