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A Dynamic Analysis of Arrears and Income Poverty in Italy

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  • Chiara Mussida

    (Università Cattolica del Sacro Cuore)

  • Dario Sciulli

    (University of Chieti-Pescara)

Abstract

We explore the effects of income poverty on the probability of being in arrears in Italy. We account for endogeneity by using a bivariate discrete response model, which allows considering feedback effects from arrears to future poverty status and selection issues. We also offer an analysis by macro-region. We use longitudinal 2016–2019 EU-SILC data. Our results suggest that being in arrears is characterized by a significant trap effect, which, however, tends to decline over time. We also find the presence of feedback effects from arrears condition to future poverty status. Notably, current poverty status is negatively associated with current arrears status, but the correlation is positive in the medium term. This may suggest that income conditions need time to exert their effects on the probability of being in arrears. In the medium term, being in arrears increases the probability of being poor. We also note heterogeneity at the regional level.

Suggested Citation

  • Chiara Mussida & Dario Sciulli, 2025. "A Dynamic Analysis of Arrears and Income Poverty in Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 11(2), pages 725-743, July.
    • Handle: RePEc:spr:italej:v:11:y:2025:i:2:d:10.1007_s40797-024-00265-7
    DOI: 10.1007/s40797-024-00265-7
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