An Iterative Approach to Stratification: Poverty at Regional Level in Italy

We develop an iterative procedure to generate stratification in non-overlapping classes of a population based on a one-dimensional variable, namely, the Italian income. The procedure works under the assumption that the income distribution is generated by a log-normal mixture of homogeneous income groups. The number of income groups is not determined a priori but rather endogenously by the iterative procedure that stops when the solution to a specific second-degree polynomial equation does not exist. We apply the approach to study the heterogeneity of Italian incomes and the poor population at regional level in the years 2005, 2010, and 2015. The cross-regional comparisons show differences in inequality and stratification dynamics while comparisons over time show the evolution of the classes.