‘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

See all articles by Elena Giarda

Elena Giarda

Dipartimento di Analisi e Ricerca Economica, Prometeia; Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN); Fondazione Rodolfo Debenedetti

Gloria Moroni

University of York

Date Written: September 16, 2015

Abstract

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

Giarda, Elena and Moroni, Gloria, ‘It's a Trap!’ The Degree of Poverty Persistence in Italy and Europe (September 16, 2015). CEFIN Working Papers No 55. Available at SSRN: https://ssrn.com/abstract=2661474 or http://dx.doi.org/10.2139/ssrn.2661474

Elena Giarda (Contact Author)

Dipartimento di Analisi e Ricerca Economica, Prometeia ( email )

Via G. Marconi 43
Bologna, 40122
Italy
+390516480911 (Phone)
+39051220753 (Fax)

HOME PAGE: http://https://www.prometeia.it/en/research-insights

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN) ( email )

via Berengario 51
Modena, modena I-41100
Italy

Fondazione Rodolfo Debenedetti ( email )

Via Roentgen 1,
Room 5.C1-11
Milan, Milano 20136
Italy

Gloria Moroni

University of York ( email )

York, YO10 5DD
United Kingdom

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