Poverty and Temporary Employment in Italy

This paper explores the relationship between temporary employment and poverty in Italy by using 2016–2019 longitudinal EU-SILC data. We model both poverty and labour market outcomes and account for possible endogeneity of temporary employment in the poverty equation. We find that temporary employment reduces the risk of poverty whether compared with inactivity and unemployment. Temporary workers are more likely to stay in poverty with respect to their permanent counterpart. The different effect of permanent/temporary employment on the risk of poverty is more pronounced for householders than for partners, thereby stressing the leading role of the former in income formation. There is evidence of feedback effects from past poverty to current temporary employment. We also find significant genuine state dependence in both the processes of poverty and temporary employment. For the latter, we note the prevalence of a trapping effect into unstable jobs relationships, especially for householders. Finally, we stress the relatively weak role of social transfers in integrating labour income from temporary employment and therefore in breaking the detrimental effect of temporary work on poverty.