Children who experience poverty more than three times likely to be poor as adults

Children who experience poverty are more likely to experience disadvantage as adults, according to a new report exploring intergenerational poverty.

Compared to young adults who never experienced poverty, the research found those who experienced poverty as children, as adults are 3.3 times more likely be poor, 2.5 times more likely to live in social housing, and 2.5 times more likely to experience financial stress. They are also more likely to experience poor mental and general health.

In contrast, young adults who grew up poverty-free are 2.4 times more likely to get university degrees, 1.8 times more likely to be full-time work, and 1.3 times more likely to have permanent and ongoing jobs. They also earn more – hourly wages of young adults who were never poor are 23 per cent higher than those who experience poverty as children.

The report, Does poverty in childhood beget poverty in adulthood in Australia?, is part of a new series finding solutions to cycles of poverty produced by the Melbourne Institute at the University of Melbourne in partnership with the Paul Ramsay Foundation.

The multi-year project is taking on a series of studies to better understand the extent, nature and causes of socioeconomic disadvantage in Australia.

The report data from the Household, Income and Labour Dynamics in Australia (HILDA) survey. It includes approximately 1300 children aged nine-15 in 2001, and followed them to adulthood in 2018, when they were 26-32 years old.

Nearly a third of those surveyed experienced at least a year of childhood poverty – and seven per cent experienced poverty in more than half of their childhood years.

Poverty is defined as households that earn less than half of the national median income – equivalent to around $A24,000 in 2018. While the impacts increase depending on the number of years a child spends in poverty, even small periods of childhood poverty have negative impacts on young adults.

University of Melbourne Professor Roger Wilkins, an author on the report, said that the findings indicate more needs to be done to prevent childhood poverty.

“Reducing childhood poverty would have many substantial benefits – not just for children later in life, but also benefits to the wider community. Greater participation in the labour market would increase tax revenue, reduce the need for welfare, and perhaps even reduce demands on the criminal justice system,” Professor Wilkins said.

Professor Glyn Davis, CEO of the Paul Ramsay Foundation, said addressing poverty is a crucial challenge for Australia.

“Poverty and inequality are at the core of poor intergenerational mobility. They shape access to opportunities in education, employment and society more generally,” Professor Davis said.

“This report presents empirical evidence that growing up poor reduces a child’s economic prospects in Australia. Alleviating poverty for children now will help break cycles of disadvantage for the future.”

The Melbourne Institute is continuing its long history of its work on disadvantage to support the research and development of innovative programs and policies to reduce the number of people at risk of poverty.

The report is the first of three to be released in 2020 by the Melbourne Institute in partnership with the Paul Ramsay Foundation.

Media are also invited to attend a virtual colloquium for the launch of the report series, at 12pm AEST on Tuesday, 27 October. Register here.

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