Poverty dynamics in Italy: an analysis of territorial disparities

In this paper, we explore the role of both observable and unobservable factors, as well as state dependence, in determining the risk of poverty and its persistence in Italy. We consider three measures: the at risk of poverty, subjective poverty, and severe material deprivation, motivated by the understanding of poverty as a complex, multifaceted and persistent phenomenon. !e empirical analysis is based on the 2015–2018 longitudinal sample of the EU-SILC survey. We focus on Italian macro-regions and apply correlated random effects probit models with endogenous initial conditions. Regardless of the poverty measure employed, we find evidence of strong state dependence and an increasing scarring effect in the South of Italy. We also find a protective role against poverty for education and (stable) employment for all macro-regions and poverty measures. Nonetheless, the other observable characteristics play roles that are often different across measures and areas.