Exploring household economic insecurity in Italy and spain: insights from a trivariate probit regression analysis

Abstract

Economic insecurity conditions economic behaviour and negatively impacts individuals’ quality of life. Previous studies that have examined this issue from a multidimensional perspective present significant methodological shortcomings, ranging from the selection of indicators to the mathematical method used for synthesising data. In this paper, we propose a new methodological framework to analyse the economic insecurity of Italian and Spanish households in the period 2013–2019. Specifically, we compute three components of economic insecurity as dependent variables in a trivariate probit model, allowing us to study the determinants of economic insecurity considering the interdependency of the three outcomes. Our results reveal that while the primary symptom of economic insecurity in Italy is the inability to deal with unexpected expenses, in Spain it is the struggle to make ends meet. In both countries, the main drivers of economic insecurity are the householder’s characteristics, although their intensity differs: being unemployed, separated, or divorced; low educational attainment; and being a woman. In Italy, there is a high regional effect, with those living in the South or the Islands significantly more likely to experience economic insecurity. The two main buffers identified as a source of economic insecurity are the tertiary education of the householder and home ownership. Our findings suggest that government policies should prioritise employment promotion, boost access to education and job training, encourage investment in affordable housing, and improve women’s working conditions.