An Empirical Assessment of Household Income Patterns in Italy

Abstract

We use the SHIW panel dataset to characterize the properties of household income patterns in Italy. Our model treats income as a linear combination of deterministic, persistent AR(1) and transitory MA(1) components. We find the typical hump-shape commonly observed on US data only for households with a highly educated head. Our estimates for the persistent and transitory shocks are instead in line with previous findings for the US. The autoregressive coefficient is insignificantly different from one. Households with a highly educated head face a higher persistent risk and a lower transitory risk. Self-employed workers face higher persistent and transitory risks.