Multi-country study finds significant differences in how poverty is passed from parents to children

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Researchers from Stockholm University, Bocconi University, and the Rockwool Foundation have studied poverty's lasting impact across generations in wealthy countries. By examining the United States, Denmark, the United Kingdom, Australia, and Germany, the team found that welfare systems play a significant role in whether children born into poverty will remain poor as adults.

The research shows a sharp contrast between countries with robust welfare systems, like Denmark, and those with fewer social supports, such as the United States. In Denmark, children growing up in poverty are much less likely to stay poor in adulthood, with only an 8 percentage point higher risk of experiencing poverty as adults. In the U.S., however, a child born into poverty has a 42% higher chance of being poor as an adult compared to someone who grew up financially secure.

Peter Fallesen, researcher at the Swedish Institute for Social Research (SOFI), explains, "A kid who spends their entire childhood in poverty in the U.S. has a 42 percentage point larger risk of being poor as an adult than someone who doesn't."

Breaking down poverty's cycle

The study examined factors that keep poverty going, including family background, access to education, job opportunities, and government help. The results show that while family background plays a large role in Denmark, the U.S. is unique in having a high "poverty penalty," meaning that a lot of the poverty passed from parents to children isn't explained by typical factors like education or employment.

"Basically, half of the social transmission of poverty in the U.S., we cannot explain," Fallesen remarks, noting that it may reflect how poverty in the U.S. "is simply more damaging" than in other countries.

The impact of social support

Countries like Denmark, the U.K., and Australia show how strong welfare systems can reduce poverty across generations. Programs like tax credits, social benefits, and job support make a real difference in people's lives, helping children from low-income families avoid poverty as adults. However, in the U.S. and Germany, where social support is less impactful, poverty persists from generation to generation.

As Fallesen explains, "We can call it redistribution…it is lowering that intergenerational poverty transmission quite remarkably," referring to how social transfers help reduce poverty's hold on families in countries like Denmark.

A closer look at the US

Researchers suggest that in the U.S., poverty in childhood might lead to more severe consequences than in other countries. Even when accounting for factors like education, health care, and job stability, a large portion of poverty in the U.S. remains unexplained. This "poverty penalty" shows that poor children in the U.S. face significant barriers that can hold them back well into adulthood.

Published in Nature Human Behaviour, the study, "Intergenerational persistence of poverty in five high-income countries," offers valuable insights for policymakers looking to address inequality and break the cycle of poverty through targeted social programs and support systems.

More information: Zachary Parolin et al, Intergenerational persistence of poverty in five high-income countries, Nature Human Behaviour (2024). DOI: 10.1038/s41562-024-02029-w

Journal information: Nature Human Behaviour

Provided by Stockholm University