This paper uses a novel micro econometric approach to analyze the impact of social
benefits on the individual probabilities of poverty exit and entry in Italy, and their
relative importance with respect to other socio-economic determinants of poverty
transitions. Year to year transitions are defined as dichotomous variables capturing
the changes of the individual poverty status, and are analyzed using random effects
probit models estimated on pooled Italian data from 9 longitudinal components
of IT-SILC covering the period 2004–2015. Our results show that social benefits
strongly counteract the adverse effects of individual characteristics like unemployment,
work intensity, inactivity, household size (and composition) and past poverty
experience on the individual probabilities of poverty exit and entry. Despite their
important effects on the individual probabilities of transitions, however, social benefits
have a limited coverage among the vulnerable groups of the population, which
strongly limits their aggregate impact on transition rates and poverty rates.
