Poverty in Italy in the 1980s and the 1990s: a measurement error approach.

This study investigates the pattern of poverty in Italy in the 1980s and in the 1990s, by means of both consuption and income measures, so as to separate the permanent and temporary components. The empirical analysis we conduct addresses not only economic issues, but also those of survey methodology and reliability of data. The model of the study of poverty is inspired by the literature on measurement error, and allows us not only to identify the two components but also to test if the variances of the shocks vary along the distributions of income and consumption. We find a slight increase of the transitory component, whereas the permanent one remains constant over the two decades. There is some evidence of non-constancy of the variances of the shocks, and a more precise formal test is under development.