The measurement of economic insecurity

The interest in the study of economic insecurity has grown in recent years. However, the ongoing debate about its measurement remains unresolved. This thesis aims to investigate the measurement of economic insecurity by proposing classes of individual objective retrospective indices. The first proposal introduces relative versions of the Bossert et al. (2022) measures. This modification allows for the evaluation of economic insecurity in terms of the proportion of outcomes, favoring the comparison between individuals and between countries adopting different currencies or having different purchasing power. Moreover, the class of measures is applied to assess the decision to change jobs. Results indicate that individuals' economic insecurity significantly increases the probability of changing jobs. The estimated models demonstrate a better fit to the data when measured by the proposed index compared to indices previously suggested in the literature. The second proposal assumes that economic insecurity depends not only on personal economic conditions but also on the comparison with peers' financial situations. A new definition of economic insecurity and a composite inter-temporal class of indices are proposed. This approach combines a longitudinal component and a cross-sectional component that gauges individuals' relative positions compared to their peers. The components' weights are determined through a novel approach incorporating a subjective economic insecurity indicator. The class of composite inter-temporal indices is applied to compare a set of European countries. Results highlight that the index provides new insights into individual perceptions of well-being, not captured by other poverty and inequality measures. Lastly, an empirical study on the effect of economic insecurity on political instability is proposed, comparing different insecurity indicators. The findings show that economic insecurity has a positive relationship with anti-incumbency, which results in unstable government at the aggregate level.