The Evolution of the Working Poor Phenomenon in Italy

Abstract

This study explores the phenomenon of in-work poverty in Italy using four waves of the European Union Statistics on Income and Living Conditions survey (2007, 2013, 2019, and 2022). We adopt a pooled probit framework to identify individual, household, and labour market factors associated with the probability of being a member of the working poor category. We then use an Oaxaca–Blinder decomposition to assess whether changes over time were driven by shifts in observable characteristics or by changes in coefficients. Results show that higher education, home ownership, and larger household size reduce the risk of in-work poverty, while foreign citizenship, single-person households, and living in the south increase it. The decomposition suggests that the 2007–2013 subperiod, encompassing the Great Recession, experienced the sharpest rise in in-work poverty, mainly due to compositional changes, while structural factors partly mitigated this increase. The overall rise in in-work poverty in the long-term (2007–2022) largely reflects the adjustments that originated during and after the Great Recession, whereas the COVID-19 crisis caused limited further deterioration, suggesting that emergency policy responses may have contained the short-term impact. Policy efforts should therefore focus on supporting vulnerable workers and strengthening family and social protection systems, to enhance labour market resilience and reduce in-work poverty in Italy.