Disability and Social Exclusion in Italian Households

This paper investigates how the presence of disabled member(s) affects the household risk of being socially excluded in Italy. By using a dynamic probit model with correlated random effects and accounting for endogenous initial conditions, we find that the presence of severely disabled member(s) increases the probability of being socially excluded by 2.5%. Importantly, we find that genuine state dependence is greater, by about 20% in relative terms, for households with disabled member(s) than their counterparts, indicating that the former experience greater difficulties in escaping from social exclusion. This suggests that policies aimed at preventing social exclusion would be particularly effective for households with disabled member(s). All these findings hold when accounting for endogeneity of disability and social exclusion because of possible feedback effects. Finally, our estimates confirm that in Italy low education, living in the South and the presence of children increase the probability of a household being socially excluded.