Social exclusion and financial distress: evidence from Italy and Spain

This paper analyzes the phenomenon of severe material deprivation (SMD) in relation to socio-economic characteristics of Italian and Spanish households. Italy and Spain have registered very different shares of severe material deprivation (households that cannot afford a minimum acceptable way of life, which is a social exclusion problem) since the 2008–2009 economic crisis, despite having similar experiences of poverty as measured in monetary terms. The analysis divides SMD into low-severe (basic or secondary or financial deprivations), medium-severe (when household suffer of two categories of deprivation) and acute-severe (when households suffer from all deprivations) and finds many interesting features associated with these categories. For example, temporary work does not shield a household from acute SMD, especially in the south of both countries, and maximum work intensity does not protect against financial distress in Italy and the Spanish South. These findings should stimulate policymakers, as local policies are needed to alleviate social exclusion.