Civilian Disability Pensions as an Antipoverty Policy Instrument? A Spatial Analysis of Italian Provinces, 2003–2005

The purpose of this paper is to investigate whether civilian disability pensions have been used as an antipoverty measure in Italy. We applied a classic panel analysis, followed by a two step GMM (Generalized Method of Moments) analysis in which we introduced the spatial variable, to Italian provincial data for the years 2003-2005. The analysis shows that the number of civilian disability pensions is not related to disability diseases, but to the unemployment rate in some areas, and to the rate of poverty everywhere. These results robustly hold when the spatially lagged dependent variable is introduced among the regressors. In discussing yjem, we stress that they reflect the number of civilian disability pensions granted, not those requested. Moreover, the national legislation on the attribution of civilian disability pensions is administered locally; therefore its application may reflect degrees of discretionary interpretation. Hence there is room to interpret civilian disability pensions as an antipoverty policy instrument in areas characterized by economic difficulties. However, we suggest that civilian disability pensions are particularly unsuited to play the role of an assistance policy instrument; once granted, they are seldom withdrawn despite possible changes in the financial situation of the recipient.