Abstract
The analysis of poverty persistence received considerable attention in recent years. In this paper we explore the role of the adopted poverty measure in the analysis of its persistence. Specifically, we consider three measures: the risk of poverty, the severe material deprivation and subjective poverty, motivated by the understanding of poverty as a complex phenomenon and for which no single measure can effectively capture its several dimensions. The empirical analysis is based on the 2013-2016 longitudinal sample of the EU-SILC survey. We focus on Italian households with dependent children. We apply a correlated random effects probit models with endogenous initial conditions to assess genuine state dependence after controlling for structural household characteristics and variables related to participation in the labour market. A strong state dependence emerges, regardless of the considered poverty measure thus providing evidence of poverty and social exclusion persistence. We also find evidence of relevance of initial conditions for all measures in focus. Nonetheless, structural household characteristics and household level economic variables play roles that are often different in the three parallel models; these differences are consistent with the aims and nature of the alternative measures.
Highlights
In recent years, many poverty studies focused on longitudinal poverty, analysing the characteristics of the households that are at risk of being permanently poor or socially excluded. Cappellari and Jenkins (2004), (Poggi 2007), (Biewen 2009), and (Addabbo et al 2015), for example, analyse persistent poverty in Europe or in selected countries (Giarda and Moroni 2018).E
The triplet composed by ARP, subjective poverty (SP) and severe material deprivation (SMD) rates offers the opportunity to compare whether structural characteristics of the households, variables related to the labour market and other economic indicators, initial conditions and actual state dependence, act or not on poverty measured in these three different ways
In this research, analyzing a four year panel sample, we focused on poverty experienced by households with dependent children in Italy
Summary
Many poverty studies focused on longitudinal poverty, analysing the characteristics of the households that are at risk of being permanently poor or socially excluded. Cappellari and Jenkins (2004), (Poggi 2007), (Biewen 2009), and (Addabbo et al 2015), for example, analyse persistent poverty in Europe or in selected countries (Giarda and Moroni 2018). The at-risk-of-poverty (ARP ) and severe material deprivation (SMD) rates are two prominent measures of poverty and social exclusion in the European Union. With reference to Italy, the burden of poverty differs widely across different household types (ISTAT 2014) Those with dependent children, especially if mono-parental or large, are characterized by much higher poverty incidence rates. Structural household characteristics and household level economic variables play roles that are often different in the three parallel estimated models These differences are consistent with the measures definitions and namely they pinpoint the roles of the incomes of references, either current or permanent.
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