Abstract

In this paper, by using both cross-sectional and longitudinal EU-SILC Italian data, we compare the effects of using absolute or relative poverty thresholds in estimating poverty incidence and in analysing poverty dynamics. We apply relative poverty thresholds (RPT) and absolute poverty thresholds (APT) to equivalised household income. The stratification of such indices by family composition, geographical area, and other socio-economic characteristics allows us to show and discuss the differences between the two approaches to poverty measurement. Our analyses show that, when using APT, the differences (in terms of poverty incidence) between regions are smaller than when using RPT. Conversely, when using APT, the differences between living arrangements are stronger than those obtained by using RPT. We also found differences in terms of poverty persistence (i.e., being poor for at least three years out of four). In addition, the APT takes into account differences in purchasing power between Italian regions, and does not depend on the average income levels, making it more sensitive to the effects of economic recessions.