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Demand functions and policy implications: an application to a Minimum Income Scheme

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Working Paper
Claudio Daminato,
Nadir Zanini

One of the goals of programs which aim at fighting poverty is to boost the household consumption of particular kind of goods, e.g. food. The aim of this paper is to provide an estimate of the potential effect on consumption of a Minimum Income Scheme in Trento province (Reddito di Garanzia), before its introduction. This is achieved by studying the demand functions through the specification of Engel Curves. Exploiting the consumption behavior of a sample of beneficiaries just before the introduction of the program we find that, on the one hand, food is a need for most of the perspective beneficiaries and, on the other hand, food is a luxury for the 9% of non-native beneficiaries. These results suggest that the latter group will increase the share of resources allocated to food because of the program.

demand functions,
food Engel curves,
JEL classification: 
C52, D12, H71, I38
December, 2014