Poverty and its dynamics in Italy: comparing results by using absolute and relative poverty thresholds

since 2005 absolute poverty thresholds based on consumptions data. Istat also publishes measures of poverty based on income, harmonized at the European level. The data comes from the EU-SILC survey, which provides extended information on income, living arrangements and household characteristics. In this paper we compare, by using both cross-sectional and longitudinal EU-SILC Italian data, the effects of adopting absolute or relative poverty thresholds in estimating poverty incidence and in analysing poverty dynamics. We apply relative (RPT) and absolute poverty thresholds (APT) to equivalised household income, including the value of own production and imputed rents, to gain poverty incidence. The stratification of such indices by family composition, geographical area and other socio-economic characteristics allow us to show and discuss the differences between the two approaches to poverty measurement. The same reasoning is applied to longitudinal data, to focus on poverty dynamics. Our analyses show that using APT the differences (in terms of poverty incidence) across regions are lower than those we get by using RPT. Conversely, using APT differences across living arrangements are stronger than those we get by using RPT. We also found differences in terms of poverty persistence (i.e. being poor for at least three years out of four). To conclude, despite APT and RPT generally provides consistent estimates of association between household characteristics and poverty incidence/persistence rates, some differences arise. In particular, APT takes into account the different purchasing power in Italian regions and does not depend on the average income level, so it is more sensible to economic recessions effects.