Out of Welfare: Functioning of Income Support in Torino

Quality & Quantity 33: 243–260, 1999.© 1999Kluwer Academic Publishers. Printed in the Netherlands.

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Out of Welfare: Functioning ofIncome Support in Torino

NICOLETTA BOSCO1, DALIT CONTINI 2 and NICOLA NEGRI11Dipartimento di Scienze Sociali, Università di Torino, Italy;2Dipartimento di Statistica eMatematica Applicata alle Scienze Umane, Università di Torino, Italy

Abstract. This paper explores the opportunities provided by a file of longitudinal data regardingincome support benefits for able bodied poor in order to understand the functioning of the localsocial assistance system in Torino.1 The features of this system, its ‘selective-categorized’ characterand the differences from universalistic systems are analyzed. In this framework, the duration of theperiods users receive benefits has been studied by means of event history analysis. The probabilityof exit from welfare is related to socio-demographic characteristics of recipients. In particular weobserve a lower propensity to exit for female headed households and households with children.The probability of exit appears to be affected also by labour market conditions, being higher whenthese are more favourable. The exit rate does not decrease as time elapsed in welfare moves on. Weobserve the existence of different styles of assistance among the different social services within thecity. Difficulties related to the interpretation of the empirical results, given the selective-categorizedfeatures of the social assistance system, are emphasized. Finally, we discuss some theoretical issuesabout evaluation of income support policies.

Key words: income support policies, longitudinal analysis, evaluation.

1. Objects of the Analysis

The aim of this study is to shed light on the functioning of social assistancein Torino, as regards able-bodied poor,2 i.e., poor households without particularproblems tied to handicaps or age. The focus is on how local policies actuallywork.

The Italian social assistance system is markedly fragmented, since legislationoften differs throughout the various parts of the country. The lack of a unifying leg-islative framework means that different regional and local units implement policiesin different ways. This tends to make local analyses particularly significant.

Analyses of the functioning of the social assistance system require rich dataarchives, which seldom exist in the Italian local contexts. As regards Torino, afairly complete data base on all the households who receive income support hasbeen set up during the past few years. The features of this archive are presented inSection 2.

244 NICOLETTA BOSCO ET AL.

The difficulties encountered in understanding welfare functioning will be dis-cussed once we have explained the features of the local institutional context. Thesocial assistance system in Torino – which we define as a ‘selective-categorized’– is much less transparent than universalistic systems working in some Europeancountries. In universalistic systems it can be assumed that all households in needreceive benefitsaccording to the need, i.e., if they are poor and as long as theyremain poor. As we will see, simple rules of coverage may not be easily grasped inTorino as well as in other Italian local contexts. In Section 3, where we illustrate lo-cal rules, we see that amount and duration of benefits may differ among categoriesof users, in particular in the case of the able-bodied poor.

Empirical analysis is the object of Sections 4 and 5. The duration of the pe-riods users receive benefits (Buhr et al., 1989) is carried out using longitudinalanalysis instruments (Blossfeld & Rohwer, 1995; Lancaster, 1990). The selective-categorized features of the social assistance system at work make understanding offunctioning quite difficult. The main problem is to assess whether the probabilityto exit welfare is influenced by the capability of recipients to solve their conditionof poverty or instead by the normative constraints and the ‘discretionary’ decisionsof the social workers.

We will show how empirical analysis may be useful to shed some light onthese issues. The importance of context elements is argued. The following wereconsidered: at institutional level, the variety of territorial services that operate inthe city; at socio-economic level, an economic cycle indicator and a number ofhardship concentration indicators that characterize the areas where the users live.

In Section 6, we discuss how to address the problem of evaluating a minimumincome policy in a selective-categorized type institutional context such as that ofTorino. The main point is whether economic support produces or not dependencebehaviours among recipients.

2. The Data

The data archive on recipients of income support benefits in Torino represents amuch more advanced information collection system than those we find in mostItalian cities (Commissione di indagine sulla povertà e sull’emarginazione, 1996).

Databases of the individuals and families who receive income support have beenavailable in Torino for around ten years and the work we have carried out overthe years has made it possible to set up a fairly complete database that has beengradually padded out (Negri, 1998).

As all those who refer to this type of source are fully aware, use of administra-tive data is neither immediate nor without its problems (Zajczyk, 1997). The oftencongested activity of welfare service operators in the territory seldom leaves scopeto consider ways in which this data could be used and there is little awareness ofthe ‘products’ that could be obtained from processing administrative sources asregards planning of the implementation/evaluation of service activities and im-

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proving knowledge of the local context. Very often, before it can be used, theinformation has to be cleaned with a complex set of operations in order to verifyits reliability and consistency.

With the cooperation of various institutional bodies,3 we were able to overcomea number of obstacles within the administration and also to update the informa-tion contained in the administrative databases with the data of the 1981 and 1991censuses and with certain data of the city registry office, thereby obtaining morecomplete, detailed information about the social-personal characteristics of the fam-ilies (and of the reference person) than that available in the welfare files, in additionto data regarding the types of benefits granted and the duration of these.

The analysis presented below covers all those households in Torino that receivedincome support4 for the first time between December 1990 and December 1992.Family histories have been followed until June 1996, which means that durationof the observation period lays from 42 to 67 months. These cohorts were selectedin order to use the information of the 1991 census as a close approximation ofthe characteristics of the users and of their families at the start of the treatment.Although information regarding the individual members of the households assistedis available, we decided to use the family as unit of analysis in that income supportgranted by the city administration is calculated according to the income of thefamily in its entirety.

Obviously, the decision to follow up the families in time entailed a number ofproblems. The composition of the family may vary not only as regards numberof members: the actual structure of the family may change to the extent that thefamily at the start of its history could be completely different from that observedafter a certain period of time. To overcome these difficulties, certain rules wereestablished in order to define the circumstances in which follow-up of the modifiedfamily could be considered legitimate and others in which the characteristics wereso different as to lead us to conclude that it was not methodologically correctto continue considering this household as a continuation of the original family.5

Having solved this problem, the information of the services regarding the variousallowances received each month by each individual had to be re-aggregated in orderto obtain longitudinal information on the treatments at family level. During theanalysis, we will therefore talk ofcashwhen referring to periods in which the fam-ilies receive the benefit, consisting of successive continuative monthly allowances,i.e., without interruptions exceeding one month. We will talk ofintervalsor non-cashto refer to periods in which the income support is suspended for more thantwo months and which may separate subsequent periods of cash.

3. The Institutional Context

To establish a number of plausible hypotheses for interpretation of the data it isessential, as we will see, to know the characteristics of the city context in whichthe family histories have developed in sufficient detail. It is worth recalling briefly


two aspects: (a) the local social assistance model; and (b) the presence of informaleconomy in the production fabric of the city.

(a) The administrative sector, ‘Social Care’, which is responsible for the socialservices run by the municipality in accordance with the regional and national leg-islation, carries out its activities through a number of centralized and decentralizedunits, involving administrative, technical and care staff with various qualificationsand responsibilities. The social service units, operating in the various districts oftown, are the actual decentralized institutions to which the citizens turn to obtainwelfare services.

According to information provided by service operators and an analysis of lo-cal legislation, it is possible to infer a rather comprehensive population coveragemodel that can be defined as of the ‘selective categorized’ type. This model favourssupport for the aged and disabled as people with these needs must and can, in ac-cordance with the provisions of the Italian Constitution (Article 38), receive moreextensive support over longer periods also at local level. The presence of familieswith persons belonging to these two categories of ‘not able-bodied’ guaranteesaccess to income support with allowances paid according to the need, for amountsequal to theassegni sociali, i.e., the cheques paid to those without a contributionrecord for pension purposes.

The situation of the able-bodied poor is rather different. The fact of belonging tothis category of need does not seem to restrict eligibility for benefits (if the require-ments established are complied with, such as income below a specific threshold)but the generosity of the allowances and the duration of these may differ consid-erably. In particular, the local norms are generally interpreted by social workersin such a way that households with dependent children are given more generoussupports.

For the other categories of able bodied, local legislation leaves more room forambiguities as regards interpretation which, as we will see, will have a crucialimpact on interpretation of the data. The benefits can in fact be renewed for theentire period in which the need of the able-bodied poor lasts.

However, this possibility is established in a regulation not contained in the textof the outline resolution of the City that regulates granting of support at moregeneral level. The possibility of granting allowances according to the need was‘grafted on’ subsequently with acircolare – i.e., a procedure of a lower legal-administrative level. This means that the operators of the various territorial serviceshave considerable leeway in interpreting the regulation. The possibility of provid-ing support according to the need also to individuals belonging to less deservingcategories would seem to relax the selective-categorized nature of the local supportsystem in the direction of a greater universalism of this. The element of discretionin interpreting the regulation concerned may however undermine this universalisticapproach, as the support scheme leaves scope for extensive variability, defining aframework that embraces various, rather than a single model of support.

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In this light, we may question the existence of different styles of assistancebetween the different services, which could affect duration of the allowances. In-depth interviews with social workers and experts have supported this hypothesis,which, as we will see, will be also confirmed by the empirical analysis.

(b) The presence of a production fabric characterized by a high incidence of in-formal economy and a limited offer of employment in the formal sector contributesto define a framework in which access to passive type income support measures oflimited amount is in fact accompanied by acquisition by the ‘able-bodied poor’ ofeconomic resources stemming from ‘irregular’ work (d’Angella, Guglielminotti,1997). The services take a fairly tolerant attitude to these practices.

Nevertheless, the mean tests continue to be rather strict and make it extremelydifficult for someone who is not poor to pretend to be so (to be eligible for benefits,the claimant must not own a car or users can be forced to carry out complicatedbureaucratic procedures or to accept the intrusive tests required to identify obligedkin, etc.). The social workers have a considerable element of discretion in applyingthese tests more or less strictly, and generally they seem to be very strict whenthere is a strong suspicion that the poor person is not deserving or truly in need.Therefore, despite the complex links between economic assistance and any ‘in-visible’ income the poor families may obtain from the informal economy, it islegitimate to assume that periods of cash are periods in which the families areeffectively unable to secure sufficient income from the formal or informal market.The local social assistance would therefore not seem to be affected by seriousproblems of specificity – i.e., of providing benefits to families that do not in factrequire income. However, this does not exclude the possibility that, in some cases,families who receive a benefit that integrates ‘irregular income’, find themselvesin relatively advantageous conditions, in some cases better than those guaranteedby the jobs provided by the formal economy and regularly paid. Generally, it ispossible to speak of ‘opportunism’ of the users only from this latter point of view.This circumstance must be taken into account when interpreting the results of theempirical analysis.

4. The Model Underlying Empirical Analysis

Individual life across welfare may be described by a sequence of episodes in andout the social assistance system. In particular, individuals receiving social benefitsare characterized by cash and noncash spells (see Figure 1).

As we have pointed out above, in a perfectly universal welfare regime wherebenefits are granted according to the need, being assisted implies being in poverty,and interruption of payments – i.e., exit from a cash spell – implies exit from asituation of economic need. In this framework the meaning ofcashspells andnon-cashspells is quite clear: the former representing episodes of poverty and the latterabsence of need.


Figure 1. The process in and out of welfare.

On the contrary, in a selective-categorized system as the local system of Torinois, interpretation of cash and noncash episodes is not an obvious task. Let’s assumethat no benefits are given to nonpoors (see Section 3). Exit from a cash spell mayoccur because of an improvement in the economic situation, or instead it may bedue to normative restrictions which might underlie interruption of payments eventhough the household is still in need. It follows that recipients are in need while theyare receiving benefits, but are not necessarily out of need when they are dismissed.

The meaning of noncash episodes is even more blurred. As a consequence ofthe situation just described, noncash spells may correspond to phases of well-beingor not. Shedding more light on this issue is essential in order to understand morethoroughly how the local assistance – aside from normative aspects – is actuallyworking.

As we have seen, in a selective-categorized social assistance system issues re-garding the functioning of social assistance are more complex than they wouldbe in a universalistic system, where benefits are provided according to the need.And, not surprisingly, we will show as well how interpretation of the results of theempirical analysis is a far more difficult task in this context.

The following questions are raised:

(i) Do the patterns of exit from social assistance differ among particular categoriesof recipients?

This might occur for two possible reasons. Restrictions regarding generosityof payments and length of spells are laid down by the local set of rules, and mayvary across different categories of recipients. Therefore, longer spells for womenwith children, for example, may be due to exogenous factors. Alternatively, longerspells could be a consequence of the greater fragility of this type of recipients inthe labour market.

(ii) Do local units responsible for provision of benefits play a role in determiningsuch patterns?

The question is related to the possible existence of sub-local discretionary rulesemployed by the units in charge of granting. This issue has been raised because,as we have seen in Section 3, local rules are quite ambiguous, and leave room fordifferent interpretations. A positive answer implies the existence of more than onesocial assistance policy, each one being applied according to territorial location.

(iii) How do labour market conditions affect exit from the local social assistance?

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Figure 2. Probability of exit from welfare: (a) decreasing; (a′) decreasing and approachingzero; (b) constant; (c) increasing with time elapsed in welfare.

The problem is to assess whether the assisted population is sensitive toopportunities in the labour market.(iv) Does permanence in social assistance suggest the existence of a chronic

behaviour among recipients?6

This issue is strictly related to question (iii). We suggest the following definitionof chronicity: the situation in which the probability of exit from welfare diminishesas time elapsed in welfare increases,7 other things being equal (see Figure 2). Notethat this concept of chronicity does not involve the comparison between behavioursof recipients and other referent groups in the population (see Section 6).

To be more precise, by ‘probability of exit’ from welfare we mean the probabil-ity of leaving welfare within a short interval of time aftert, given survival att. Theconcept will be defined in Section 4.2 as thehazardfunction.8 As we will see inSection 5, assessing the shape of a hazard function in a highly explorative contextraises difficult problems of identifiability.

With respect to issues (i)–(iv), the aim of this section is to describe the deter-minants of the process across social assistance, in order to understand what makesrecipients stay longer in the first cash episode. Results regarding duration of non-cash episodes are not shown here, because, as we pointed out before, meaning ofnoncash is – for the time being – still unclear, and probably needs further investiga-tion. Also cash episodes following the first have been not been considered, becausesuch analysis requires deeper understanding of how re-entering social assistance isregulated.

4.1. CHOICE OF COVARIATES

With the aim to provide some preliminary answers to the problems addressedabove, the following explanatory variables are included in the model for durationof cash episodes:(i) Categories of recipients, as specified by the local set of rules:


FEMALE head of household,CHILDREN in household,NATIONAL (Italian/other).Note that more detailed definitions of household structure were considered. As themost significant specification was referring to sex of the head of family only, wedo not show here all the alternative variables employed.(ii) LOCAL UNITS operating in the various districts and responsible for provision

of social benefits.(iii) ECONOMIC CYCLE, measured by the number of monthly new hires9 in Torino.

We have chosen to include this indicator instead of net employment change,because a zero net effect may arise from a situation of big turnover of employeesas well as from a situation in which no jobs are created and no jobs are destroyed.The latter, obviously, provides no opportunities for the unemployed.

Other covariates are included in the model as control variables:(iv) Variables related to social rooting:TIME spent in Torino sinceIMMIGRATION ,10 TELEPHONE in household.(v) Other socio-demographic conditions:AGE of head of household,EDUCATION of head of household,EMPLOYMENT

condition of head of household in 1991 andEMPLOYMENT condition in 1986,11

as indicators of relative strength on the labour market.(vi) Particular house conditions:MARGINALITY , indicating absence of toilets and/or no heatingDIMENSION OF HOUSE

(vii) Indicators of hardship of users’ residence area – derived from factor analysis– in order to control for population composition in the territorial areas wherelocal units operate:12

FACTOR 1, FACTOR 2, FACTOR 3

We have not attempted to label these factors because they are used mainly ascontrol variables.

4.2. DURATION MODELS

Models for durations are based on the hazard function, defined as

h(t|xi, zi(t)) = lim1t→0P [t < T < t +1t|T > t, xi, zi(t)]

1t,

wherei is the household,T is duration in a given state,X is a time invariant vector,andZ(t) a time varying covariate vector. The rough interpretation of the hazardfunction is thath(t)1t is the probability of exit from the state in the short intervalof length1t after t , conditional on the state still being occupied att .

If we can assume the proportional hazard specification, which implies that haz-ard functions corresponding to different values of covariates have the same shape,but lay at different levels (see Figure 3):

h(t|xi, zi(t)) = h0(t)exp(βxi + γ zi(t)),

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Figure 3. Proportional hazard functions.

we may estimate coefficient vectorsβ andγ without specifying the baseline func-tion h0(t). Note that exp(β) is more easily interpreted thanβ itself: if x increasesby 1, the risk of exit is multiplied by exp(β). For dichotomous variables, if we setto 1 the risk of exit forx = 0, the risk forx = 1 is exp(β).

We maximize the partial likelihood (Cox & Oakes, 1984):

L(β, γ ) =k∏i=1

(exp(βxi + γ zi(t))

6l∈R(t(i)exp(βxi + γ zi(t))),

wheret(i), for i = 1 . . . k, are the ordered durations of noncensored observations,and R(t(i)) is the risk set, i.e., the set of cases at risk of exit at timet(i), inother words, the cases for whichT ≥ t(i). The method produces consistent andasymptotically normal and efficient estimators forβ andγ .

The economic cycle is here specified as a piecewise constant function of calen-dar time. As data refers to monthly hires, we assume that exit from a cash spell isrelated to the total number of hires in Torino in the current month. Interruptionof payments follows entry in the labour market, and can be assumed to occurimmediately after employment.

Time varying covariates might be employed as well to test the proportionalhazard specification, by allowing coefficients of covariates to vary with duration.Consider the model:h(t|x) = h0(t)exp(β1x + β2xt), wherex is a dichotomicvariable. Significance ofβ2 implies nonproportionality of hazard functions withrespect to values ofx. As we will see, one variable, nationality, will not pass testof proportionality, and the estimated effects will imply crossing hazards for Italianand foreign recipients.

Regarding estimation of the baseline hazard functionh0(t) – useful to evaluatethe existence of chronicity, in the sense defined above – recall that when estimationis performed through maximization of Cox’s partial likelihood, the shape of thehazard function is not directly estimated. The baseline, however, may be estimatednonparametrically, given estimates of covariate coefficients.


Table I. Significant covariates for duration in firstcash

Variable eβ p-value

FEMALES 0.80 0.0300

CHILDREN 0.76 0.0200

NATIONAL 1.53 0.0099

NATIONAL ∗DURATION 0.94 0.0009

TIME IMMIGRATION 0.99 0.0458

LOCAL UNIT 14 0.43–2.29 0.0000

ECONOMIC CYCLE 1.10 0.0125

FACTOR1 1.21 0.0152

Assessing the shape of a hazard function in a highly explorative context is a dif-ficult task. If there is unobserved heterogeneity, i.e., if some explanatory variablesfor duration are neglected – the shape of the observed hazard function is biased to-wards negative duration dependence13 (Lancaster, 1990). Suppose that conditionalhazard is constant, i.e., givenX, Z(t) and omitted variables, the exit probabilitydoes not change as time moves on; then the observable hazard, givenX andZ(t),is decreasing. The bias of the observed hazard function is due to a selection ef-fect, reflecting the fact that, as time goes by, the group of survivors, other thingsbeing equal, is increasingly composed of people having a lower propensity to exitthe state. Note that unobserved heterogeneity is very likely to exist in explorativeanalysis.

Therefore, if we find a decreasing hazard function, we will not assess whetherprobability of exit really decreases as time in welfare goes by, or if the observedshape is due to statistical reasons. On the contrary, if we find a nondecreasinghazard function – as we actually will do – we should conclude that no negativeduration dependence applies.

5. Results

We are now going to discuss the main results of empirical analysis, with the aimof understanding the functioning of the system under study. Significant covariatesand estimated effects on the risk of exit from the first cash, are reported in Table I.

With respect to the main issues addressed in the previous section, we mayconclude that:

(i) We observe relevant differences in terms of the probability of exit from thefirst cash among different categories of recipients. Unfortunately, as we will argue,these results are not easily interpretable in terms of functioning.

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Households with female head and households with children have a lower prob-ability to exit welfare. In particular, the exit probability for female headed familiesis about 80% that for male headed families (as eβ = 0.8, see Section 4.2), andthe probability of exit for families with children is about 76% that of familieswithout children.FEMALE and CHILDREN effects are additive, as the interactionis not significant.

These results reflect a fundamental aspect of the formal and informal normativestructure of the local system. In general, as we said in Section 3, social workersgive income support to families with children in a more generous way. From aninformal point of view, it is also worth recalling that the selective-categorized typeconfiguration of the Torino system is based on the idea that the public admin-istration provides benefits only in a subsidiary way to the family centred on thebread-winner husband (Negri, 1996); this could in fact induce the operators to bemore attentive when this figure is no longer present. Considerations could also bemade regarding the relative weakness of women in the labour market: in the Torinoselective-categorized type system, women could be assisted for longer also becausethey encounter greater difficulty in finding employment.

However, the global significance of the longer duration in the social assistancesystem of women bread-winners and families with small children is not strongenough to support conclusions regarding the functioning of local welfare. At thisstage, it is not possible to establish the extent to which the longer duration in thesocial assistance system of these categories is to be ascribed to their relativelygreater need – which could still be left partly uncovered – or to the fact that, needbeing equal, it is the other categories of able-bodied poor – less privileged by thelocal formal and informal regulations – that receive a less favourable treatment.

The analysis shows also a nonproportional effect of the variableNATIONAL .Immigrants seem to exit first cash at a lower pace than Italians in the beginning, butas time goes by, the pattern reverses. Social rooting seems to be relevant as well,as TIME IMMIGRATION is significant – although the direction of the coefficientis not so easily interpretable, as more rooted households have lower risk of exit.These results don’t seem to clarify local welfare functioning as well, because weare not able to assess how much the effects are due to changes in the situationof recipients, or instead to the differences applied by informal models of welfarebetween nationals and immigrants, as well as between ‘old’ and ‘new’ immigrants.

(ii) LOCAL UNITS15 are highly significant. As a matter of fact, it is by far thevariable with the higher level of significance. The variability observed among allthe different services is very high. Note that the estimate of the coefficient corre-sponding to the ‘most generous’ service is about five times higher than that for the‘least generous’ one.

This is a very useful result in understanding the functioning of local incomesupport. The great variability observed reveals the extent to which local welfarefunctioning is conditioned by the considerable element of discretion of the op-erators, in view of the ambiguity of the rules mentioned in Section 3. There is


strong evidence in favour of the existence of sub-local nonwritten rules employedby the services that provide granting. This result also shows that the local systemdoes not operate on the basis of a single model. It is possible to assert that severalincome support policies co-exist in the territory, all of which operate by linkingan assortment of instruments in various ways:minimo vitale, minimo alimentare,loans, extraordinary support, etc. Also, in view of the severity of the local meanstests, as described in Section 3, it would be plausible to assert that these policies canbe aggregated in two groups: those that are in fact more sensitive to the principle ofaccording to the need and those more concerned with the possibility of opportunistcalculations of the able-bodied that may induce them not to emerge from their stateof hardship in order to take advantage of the relatively favourable mix of assistanceand income from irregular work. The hypothesis that variability might be due to thefact that certain services continue to assist cases even when these are no longer inneed can however be excluded (see Section 3).

(iii) Labour market conditions seem to affect exit from the social assistancesystem. In particular, there is evidence that when new hires increase roughly by15%, the probability of exiting the state of benefit recipiency is about 10% higher.It can be deduced that functioning of the local system in its entirety is charac-terized by a certain level of sensitivity toward the opportunities provided by thelabour market. In the absence of comparisons with appropriate reference groups,this sensitivity does not make it possible to exclude that the system also gives riseto states of dependence amongst beneficiaries: they could be even more sensitive toemployment opportunities if they did not receive any aid. Nevertheless, the resultis sufficient to retrench the more pessimistic viewpoints according to which socialassistance functions in worlds that are completely separate from the market. Unlesswe are willing to assume that operators tend to dismiss users when the cycle ishigh, in order to avoid opportunistic behaviours, the thesis of complete exclusionof recipients from the labour market may be rejected. In this light, it seems reason-able to foresee possibilities of contact and synergy between employment policiesaddressing the underprivileged and welfare.

In order to assess whether female headed households are less sensitive to em-ployment opportunities, an interaction betweenECONOMIC CYCLE and FEMALE

has been introduced in the model. This variable is not significant. Note that thisresult doesn’t mean that women are as strong as men in the labour market, but onlythat the risk of exit for women is relatively higher when economic cycle is high –and with the same proportionality coefficient of men – than it is when cycle is low.

(iv) Empirical analysis suggests the existence of a nondecreasing shaped hazardfunction. According to the definition suggested in Section 4, this means that there issome evidence against the existence of chronic behaviours.16 Nevertheless, a ratherstrong argument against this conclusion may be applied in a selective-categorizedsystem like the one under study: it is not possible to assess whether the result canbe explained by the change in the situation of recipients, or instead by a decision

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of social workers, which could, at certain points in time, interrupt benefits for –formal or informal – normative reasons (see Section 3).

In order to analyze more in depth the issue, we tried to assess whether thesensitivity to labour market diminishes after a certain amount of time. With thisaim, we have fitted a model with an interaction between the time varying covariateECONOMIC CYCLEand duration. The interaction is not significant, suggesting thatsensitivity to labour market shouldn’t change with time elapsed in welfare.

In conclusion, it would seem that system functioning does not have to come togrips with the feared ‘ratchet effects’ whereby the longer a person is assisted, themore difficult it is for this person to enter the labour market. From this viewpoint,we may question another radically pessimistic viewpoint on the consequences ofthe ratchet effects: namely, that the period in social assistance must be short andthat any condition on the market, no matter how fragile and precarious, is betterthan assistance. The result suggest the less dramatic idea that system functioningcan count on a period of time, that may even be quite long, to try and solve users’problems with actions designed to insert these in suitable jobs.

It is true that, in the absence of control groups, we do not have sufficient infor-mation to test the hypothesis that users, because they are assisted, are relatively lesssensitive to the opportunities of the labour market. In spite of this, the absence ofevident traces of ratchet effects suggests that the hypothesis of chronicity, accord-ing to which the longer income support is given, the more recipients are unable toexit welfare, should not hold.

6. Starting Points for an Evaluation Program

We may think now how to address the problem of evaluating a minimum incomepolicy in a selective-categorized type institutional context such as that of Torino.We will talk about evaluation of a policy in a quite strict sense: we intend hereto assess the impact of a policy (Martini, 1992), i.e., to understand the causalmechanism that links an outcome identified as desired effect of the policy, andthe policy itself. In other words, the key question relates to understanding whetherthe outcome observed is due to the policy or to the characteristics of the populationof beneficiaries.

The remarks given below are intended mainly to be a sort of theoretical exerciseas regards evaluation. We propose what we consider to be an interesting definitionof policy effectiveness although no in-depth study has yet been made of the fac-tual possibility of basing evaluation research on it. At the risk of appearing tooacademic, we try to discuss this topic, aware that evaluation type analyses must bebased on clear cognitive objectives, defined beforehand.

It is useful to give some formal definitions of impact of a policy (Martini, 1992;Holland, 1986). Let’s defineU as the population of individuals that may poten-tially be beneficiaries of income support measures, andY as the variable that thepolicy proposes to modify (outcome). Ideally,Ys(u) − Yns(u) could be defined as


the ‘effect of the policy’ for the individualu whereYs(u) represents the value ofthe outcome if the person is assisted andYns(u) the corresponding value withoutassistance. The problem is that it is not possible to observeYs(u) andYns(u) atthe same time. For this reason we must redirect our interest toward comparison ofE[Ys], the expected value of the outcome referring to the group of individualsassisted withE[Yns], the corresponding value of an appropriate control group.If the assisted population has different characteristics from the control group, anon-random selection problem must be solved.

What is a reasonable outcome of income support policies? Certainly, the mainaim of these policies is coverage of the needs of poor families. In this regard, anevaluation in the framework described above is of no purpose, because provisionof income support does not aim to induce a structural change in the situation ofrecipients, as instead is the explicit aim of active employment policies. Definingthe outcome as: ‘coverage of the needs’, if the assisted population is appropriatelysubsidized and if the benefits are provided according to the need, the policy is bydefinition effective.17

However, a major drawback of income support, often adopted by the critics ofsocial assistance policies, is that it may produce dependence. In the face of this risk,it is relevant to consider the structural changes that may be induced by the policy.From an evaluation point of view, the main issue becomes:Do income supportpolices produce dependence?

What do we mean by dependence in this context? In the most widely-acceptedmeaning of the term, dependence means a situation in which the beneficiaries areless able to solve their objective state of need compared with nonassisted poors.18

This may occur for subjective reasons. Availability of income support could infact demotivate the beneficiaries, making them less active in seeking employment.Loss of ability may also be caused by sociallabelling processes that disqualify(Paugam, 1991) the needy person and cause exclusion from the labour market.Also, if assisted for long periods, the beneficiaries could lose their links with otherworkers that are very useful for getting a job (Granovetter, 1974).

Let ‘duration of economic need’ be the outcomeYs. A possible translation of theconcept of dependence in operational terms could be as follows: the system pro-duces dependence if the duration of economic need with social assistance exceedsthe duration of need without social assistance.

Here, by ‘duration of economic need with social assistance’ we mean the du-ration of the period in which the recipient household is unable, independently, toreach the income threshold below which benefits may be provided. In accordancewith the above, by ‘duration of economic need without social assistance’, we meanthe duration of the period in which the nonrecipient household has a level of incomebelow this threshold.

This is neither the time nor the place to discuss the problems entailed in con-structing a suitable control group – which include the risk of considering a sampleaffected by problems of selection bias – or in gathering difficult information such

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Figure 4. Duration of benefits and duration of economic need.

as reconstruction of the periods of need. We will refer here only to the problemsthat regard specifically evaluation in social assistance systems like ours, comparedwith more universalistic ones.

In universalistic systems the duration of need matches the duration of the periodof cash. As already mentioned, in systems such as that existing in Torino, this maynot be true. Here it is only possible to assume that the duration of the period ofneed for recipients is not less than the duration of the period of cash (see Figure4). This should hold because payment of benefits in the absence of need can beexcluded, in view of the characteristics of the means test (see Section 3).

We could conclude that dependence mechanisms apply if and only if the dura-tion of cash were higher than the duration of need for nonrecipients. This meansthat the income support policy induces longer episodes of need. No conclusionscan be reached otherwise. Therefore, apart from the problem of measuring the du-ration of need amongst nonbeneficiaries, the problem of determining the durationof corresponding periods amongst the beneficiaries of income support measureswould have to be addressed as well in this type of social assistance system.

7. Conclusions

In Section 5 we have seen that the functioning of income support benefits in Torinoseems to be affected by labour market conditions and that there are no clear signsof the existence of chronic behaviours. We have also observed a great variabilityamong social services which operate in the various districts of the city.

On the other hand, we have seen that some empirical results are difficult to in-terpret with respect to understanding the functioning of the local social assistance.In fact, it is not easy to assess whether longer duration in welfare is due to greaterneed of some categories of recipients, or instead to the decisions of social workers.

Nevertheless, we do think that good longitudinal data bases may have a very richdescriptive significance, and are very useful guide-lines for the design of further –qualitative and quantitative – research.

Consider the result regarding the lower probability of exit from welfare offemale headed families. In-depth interviews with operators would allow us tounderstand which models of family and of the family-welfare state relationshipand which stereotypes of the deserving poor may make the social operators moresensitive to the needs of families of ‘women’ or those with dependent children. And


comparative type quantitative studies on groups of the population would make itpossible to understand whether poor families with female bread-winner or withchildren are less capable of taking advantage of market resources.

Understanding of welfare functioning may be improved also by in depth inves-tigation of the meaning of noncash episodes. As we have pointed out in Section4, having exited welfare does not imply absence of need. In-depth interviews aswell as quantitative follow-up analyses, could clarify this crucial point. Deeperknowledge about noncash episodes should be very useful for longitudinal analysesin evaluation perspectives as well.

Finally, we should point out what results may be drawn from the empiricalanalysis actually performed on the functioning of the policy in Torino as regardsimplementation of an evaluation analysis addressing the problem of dependence.The strongest piece of evidence refers to the existence of different models ofincome support applied in the various areas of the territory. This aspect mustnecessarily be taken into account in a meaningful evaluation analysis.

Moreover, the presence of several models of protection could be useful forevaluation purposes if it can be assumed that the more generous welfare centres,as regards duration of benefits, apply the principle of according to the need – seeSection 5, point (ii). At least as regards these cases, it should be possible to designan evaluation research in the simpler framework described for the universalisticsystems.19 It is only in this situation that longitudinal data archives on recipientslike the one we have built could be employed directly for evaluation purposes. Thismatter will have to be investigated in depth before actual implementation.

Notes

1. All the sections of this paper are the result of the cooperation of the authors. Nicola Negri hascoordinated the various steps of the work and has written Section 5 with Contini. Nicoletta Boscohas mainly worked with Nicola Negri to prepare the data archive and has written Sections 2 and3. Dalit Contini has discussed with Negri and Bosco the model of empirical analysis and hasimplemented it; she has written Sections 4 and 6. All authors share Section 1 and 7.

2. The following reasonings arise from the international comparison of some basic income schemesin six European countries. The research was committed by the UE. The international equipeshave been coordinated by C. Saraceno (see ESoPo, 1998). The research has been financed byUE and CNR funds.

3. In addition to the City of Torino, the Torino Longitudinal Observatory at Local Health Unit 5also cooperated with the Department of Social Science of the University of Torino in the project.

4. The decision to observe only new users of the services was made in order to eliminate theproblem of left censoring.

5. Each household has a record with a different code for each territorial service. If, for example, afamily moves to another area of the city, the new record maintains the information of the codeassigned previously to that family at the original welfare centre. In this way, it is possible totrace the codes of the records of any households linked to the original household (for example,in the case of break up of the family). In all these cases, we had to decide how to treat recordslinked to each other. Following long-term observation of the cases that gave rise to this problem,we defined the following rule: when the owner of the first record is no longer the owner of the

OUT OF WELFARE 259

second and no longer appears amongst the beneficiaries and the composition of half or moreof the beneficiaries present in the original household has been modified, the link between therecords is eliminated. Obviously, other criteria could have been established in different contexts.

6. It is clear that an exhaustive analysis regarding chronicity should take account also of cashperiods following the first one. Analysis regarding first cash only, although not sufficient, seemnevertheless meaningful, as 53% of the households receiving benefits have had only one cashepisode (and 80% no more than two), in the 3.5–6 years period of observation. In addition, wemust note that the median overall time spent in welfare in the period of observation was 8–12months, leaving therefore 2.5–5 years on average out of welfare. In this light, we should notbe too worried about the possibility that many of those who have had a short first cash wouldre-enter welfare very soon, and continue to receive benefits thereon.

7. Another possible definition which someone would probably prefer, is that at a certain point intime, the risk should approach zero. Note that this definition is more restrictive. (See Figure 2,curve (a′)).

8. To help comprehension, from now on we will make extensive use of the term ‘probability’instead of the more adequate terms: ‘risk’ or ‘hazard’, as the latter have in the everyday languagea negative connotation, which we regard here as being misleading.

9. The number does not include direct passages from a job to another.10. The variable is defined for all head of households, Italians and foreigners. The value we assign

to people born in Torino is 100 (years).11. Information regarding these variables comes from 1991 Population Census. Modalities are:

employed, not employed.12. Twelve indicators of hardship related to the 1991 Census areas where recipients live, have been

considered (unemployment rate, in search of first job rate, percentage in the area of: illiterates,nonnative residents, nonnative present on the territory, families in rented houses, families in ‘casepopolari’, large families, no toilets within the house, no heating within the house; dimension ofthe house, proportion of children and elder people within the household). With the first threefactors, 74% of total variance was explained.

13. Under mild conditions.14. Reported values for exp(β) represent minimum and maximum values with respect to the average

level.15. The number of local units in Torino is 27.16. Note that, if the alternative definition of chronicity was applied, this conclusion would still hold.17. In this light, an important problem is that of evaluating the policy according to its specificity and

sensitivity.18. Some able bodied poor might decide not to claim for benefits because of shame or because they

fear intrusive means test. Some others do not have access to benefits because they lack someentitlements required for the provision of grants, even if they are below the poverty threshold.

19. The presence of several policies may permit comparison of the different income support modelsoperating in the territory of Torino. At the moment, there seems to be little specific interest inthis operation, which is certainly worth investigating.

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Out of Welfare: Functioning of Income Support in Torino