Unemployment benefits can be broadly divided into three categories: unemployment insurance, operating as a sort of insurance fund for workers who pay into them; unemployment assistance, which targets benefits towards certain groups that have exhausted their access to unemployment insurance; and social assistance, in which benefits are generally available for those who pass a means test, making them available to unemployed persons who lack access to other funds. The difference between the first and the latter two programmes is best conceived of as a distinction between insurance and assistance, with unemployment insurance entailing horizontal redistribution (i.e. between different stages of an individual's life) and unemployment and social assistance involving vertical redistribution (i.e. between richer and poorer individuals) (Palier 2002: 11). Due to the nature of these benefits, financial stresses and the growing number of atypical employees (a group which is typically unable to qualify for unemployment insurance) over the past several decades have led to decreasing proportions of the unemployed being covered by the principal unemployment benefit scheme. As a result, the existence of a non-categorical social assistance benefit in particular has become increasingly essential in preventing large swaths of unemployed persons from falling through gaps in protection – though of course the benefit's wider availability is compensated by lower benefit levels when compared to unemployment insurance.

This process has been particularly acute in Continental and Southern Europe, where the insurance principle has historically occupied a central role across welfare state institutions. The extent to which these countries have largely corrected for declining unemployment insurance coverage rates, however, has varied dramatically. Exploring this process of coverage extension via social assistance, this chapter will contrast the French and Italian experiences surrounding the introduction of a national minimum income scheme, which is best conceived of as a benefit of last resort, designed to combat poverty and target all unemployed persons rather than simply those who had made adequate unemployment insurance contributions. This analysis will be carried out in an attempt to explore why large gaps in coverage have been filled in some countries but persist in others. Focusing on a paired comparison in this way allows us to explore the factors at work behind a residualist (as opposed to universalist) approach to dealing with welfare state outsiders under conditions of broad fiscal constraints.