Key Determinants of Poverty risk in Italy

This paper illustrates the main regional differences of Italian poverty and presents an econometric analysis of the key determinants of poverty risk for the period from 1992 to 2008. The results show that an increase by 1% in the unemployment rate and a lower level of education raise the risk of being trapped in poverty by 0.42% and 1.7%, respectively. Conversely, social protection benefits and higher levels of education attainments contribute significantly to reduce this risk. Since the low rate of employment in «foot-loose activities» is one of the main culprits of the poor economic conditions in Southern Italy, a fiscal measure which aims at promoting automatic incentives to employment in manufacturing activities is suggested. This policy could contribute to securing employment and reducing poverty in a country characterized by a secular divide, with a light burden for public finances, and a positive sideeffect on Italy’s balance of payments.