Abstract

This paper studies the impact of macroeconomic performance on poverty rates by household characteristics in Italy between 1980 and 1997. The main results can be summarised as follows: 1. Changes in macroeconomic conditions explain a greater part of changes in poverty rates among households headed by high school graduates relative to those headed by individuals without any educational attainment. Due to the aging population and to a significant increase in the educational level of the population observed in the last two decades, one might expect households headed by elderly people to account for a large proportion of households headed by individuals without any educational attainment. Thus poverty rates among this type of households are less responsive to changes in macroeconomic conditions because their economic situation is not affected by labour market development as the elderly receive pension benefits. 2. The state of the macroeconomy has only a modest effect on poverty rates among households headed by university graduates. Two different reasons can be put forward to explain this. First, highly educated workers have, on average, a higher earnings capacity relative to the less-educated ones. Second, given the strong correlation between family background and educational attainment, highly educated individuals are less likely to sely on their wage as the only income source when compassed to the less-educated oms. 3. Changes in unemployment rates have the largest impact on poverty among households with five or more members. A large proportion of these households rely on a single wage earner and whenever he/she loses his/her job the risk of poverty increases dramatically.