Does poverty in childhood beget poverty in adulthood in Australia?

Abstract

Analysis of the intergenerational transmission of economic disadvantage and entrenched poverty is concerned with discovering the extent to which an individual’s socio-economic outcomes as an adult depend on the economic fortunes of his or her parents. This includes examining the level to which children who grew up in poor households perform worse in terms of educational attainment, labour market outcomes, health status and even life satisfaction and well-being, than their peers who grew up in better-off households. This report provides new empirical evidence that the length of time children live in households experiencing income-based disadvantage is a predictor of other forms of disadvantage experienced by early adulthood. This analysis explores the extent and structure of this form of intergenerational transmission of disadvantage, and especially entrenched income-based poverty, in Australia. The analysis draws on the Household, Income and Labour Dynamics in Australia (HILDA) Survey to examine a cohort born between 1986 and 1992 over the 18-year period from 2001 to 2018. The HILDA Survey is a unique longitudinal dataset which is well suited to the study of the transmission of poverty across generations in Australia. This survey is nationally representative and contains rich information on individuals’ personal, family and household characteristics, economic circumstances educational outcomes and labour market activity, and furthermore allows us to match parents to their children. The results suggest that low household income during childhood is a key predictor of disadvantage in later life (as a young adult) and therefore an important indicator to guide policy interventions to break intergenerational cycles of disadvantage.