‘It's a Trap!’ The Degree of Poverty Persistence in Italy and Europe
CEFIN Working Papers No 55
31 Pages Posted: 18 Sep 2015 Last revised: 2 Oct 2015
Date Written: September 16, 2015
This paper analyses poverty persistence in Italy and compares it with France, Greece, Portugal, Spain and the United Kingdom, focusing on its dynamics through the analysis of transitions into and out of poverty and the econometric quantification of true state dependence. The analysis is performed on the longitudinal component of the EU-SILC for the period 2009-2012. Descriptive statistics and transition matrices reveal that households in Italy are characterised by a higher degree of poverty persistence than in other countries. This evidence is confirmed by the estimation of Heckman’s dynamic random effects probit model. Italy is the country with the highest level of true state dependence estimated at 0.26, after Greece (0.30), while the UK has the lowest value (0.07). Italy also shows an impact of individual characteristics on current poverty lower, in absolute terms, than the lagged dependent variable. This may explain the gap in the persistent to current poverty ratio between Italy and other countries.
Keywords: poverty, dynamic probit models, state dependence, EU-SILC
JEL Classification: I32, C23, C25
Suggested Citation: Suggested Citation