Assessing poverty persistence in households with children

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.

The dynamics of poverty in Europe: what has changed after the great recession?

“…ten years later. A positive association with the poverty rate is also found for female heads of household (Giarda and Moroni 2018 ; Fabrizi and Mussida 2020 ), and this remained relatively unchanged over time. Notably, we find a role of education in reducing the risk of poverty, and especially for higher education.…”

“…and especially after the Great Recession (–3 pp.). The role of the elderly as a stable source of income (especially through elderly pensions) in mitigating the risk of poverty is supported by the existing literature (see, for instance, Giarda and Moroni 2018 and Fabrizi and Mussida 2020 ). Being a homeowner is negatively associated with the poverty rate as well.…”

“…In the past 20 years, the literature on poverty has mainly focused on “longitudinal poverty”, offering dynamic analyses of the characteristics of households that are at risk of being permanently poor or, more generally, socially excluded. Among the single- and multi-country studies are, for example, Devicienti and Poggi ( 2011 ) and the more recent work by Fabrizi and Mussida ( 2020 ), which analyze the persistence of poverty in Italy, as well as Biewen ( 2009 ) in Germany and Ayllón ( 2013 ) in Spain, while Ayllón and Gábos ( 2017 ), Giarda and Moroni ( 2018 ), and Bosco and Poggi ( 2020 ) look at European countries more broadly.…”

“…Fabrizi and Mussida ( 2020 ) investigated the phenomena of at-risk-of-poverty, severe material deprivation, and subjective poverty in Italian households with dependent children using longitudinal (2013–2016) EU-SILC survey data. They apply 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 labor market.…”

“…The literature (e.g., Biewen 2009 ; Fabrizi and Mussida 2020 ) has stressed that poverty is a dynamic process, and thus it is important to take a longitudinal perspective when analyzing it (Ayllón 2013 ). An advantage of using a dynamic approach is the possibility of isolating the contribution of genuine state dependence to poverty persistence from that due to observed and unobserved heterogeneity.…”