Detecting economic insecurity in Italy: a latent transition modelling approach

Abstract

Economic insecurity has increased in importance in the understanding of economic and socio-demographic household behaviour. The present paper aims to analyse patterns of household economic insecurity over the years 2004-2015 by using the longitudinal section of the Italian SILC (Statistics on Income and Living Conditions) survey. In the identification of economic insecurity statuses, we used indicators of economic hardship in a latent transition approach in order to: (i) classify Italian households into homogenous classes characterised by different levels of economic insecurity, (ii) assess whether changes in latent class membership occurred in the selected time span, and (iii) evaluate the effect of employment status and characteristics of individuals on latent status membership. Empirical findings uncovered five latent statuses of economic insecurity from the best situation to the worst. The levels of economic insecurity remained quite stable over the period considered, but a non-negligible worsening can be detected for the unemployed and individuals with part-time jobs.