The Socioeconomic Consequences of Privatization: An Empirical Analysis for Europe

This paper analyses the dynamics of poverty in Italy and compares it with that in France, Spain and the UK. For this purpose, we use transition matrices of entry and exit poverty rates and quantify true state dependence through econometric techniques. The analysis exploits the longitudinal component of EU-SILC for the period 2009–2012. Estimation of dynamic random effects probit models shows that, in all countries, after controlling for individual heterogeneity and initial conditions, there is evidence of true state dependence. In comparative terms, when not accounting for regional disparities within countries, the degree of poverty persistence is highest in Italy and lowest in the UK. If regional effects are considered, the degree of poverty persistence in Italy is of the same order of magnitude as in France and Spain, but higher than in the UK. Our findings suggest that unlike other countries, in Italy regional disparities play an important role in explaining poverty state dependence.