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a blog from young economists at Nova SBE

Intergenerational Poverty and how to tackle it

According to the Commission on Poverty, intergenerational poverty refers to the poverty induced by the socially and economically background of the parents to the future situation of the child. Evidence suggests that individuals that experience poverty in their childhood are more likely to be poor in their adulthood. As we can see in table 1, few adults, less than 6%, who did not live in poverty during their childhood are poor in early and middle adulthood. However, poverty rates for adults who experience poverty in their childhood depend positively on the length of their exposure to poverty: a person who lived most of his/her childhood (51%-100%) in poverty is more likely to be poorer than a person with low-to-moderate levels (1%-50%) of poverty during childhood. Nevertheless, the difference between the poverty rates of both groups decreases with age, since it accounts for 8.4% to 6.5% at ages 20 and 25 and 6.3% to 5.2% at ages 30 and 35. Moreover, it is remarkable that the exposure to poverty during childhood is more harmful for African-Americans than white adults, since with at least one year of poverty during childhood 15.2% of white adults experience poverty in their 20’s while in the African-American population it increases to 34.6%. However, this might be explained not only by the greater exposure of African-American to poverty during childhood, but also by the discrimination they face when entering the labour market.

grafico poverty

Furthermore, the likelihood of an individual to be poor may be influenced by the private transmission of capital- debt, land, cash and the public transfer of resources between generations-taxing older generations to finance the education system (Moore, 2005), since we can assumed that each working age generation invests in their children and support their parents due to altruism and strategic self-interest (Collard, 2000).

Since intergenerational poverty involves environmental factors such as educational and employment opportunities and subjective variables like the availability of role models and parents’ aspirations, effective interventions need to be evidence-driven and policies should be developmental and proactive. Thus, the strategies adopted have to be focused on achieving intergenerational economic mobility as a key indicator of the level of equality of opportunity in a society.

Moreover, the earlier the intervention, the less will be the impact of deprivation on the development of a child due to the cumulative life cycle development.

Therefore, the Portuguese educational system developed a set of measures designed to ensure equal opportunities in school access and success for all pupils in primary and secondary education, named Ação Social Escolar (ASE). These measures include food programs, school insurance and transportation, accommodation, textbooks offers and specific subsidies so that students from low-income families can benefit the most from school education. The success of this action might represent an increase in social cohesion and mobility.

Furthermore, in the UK, initiatives like Empowering Parents and Empowering Communities aims at increasing parents’ ability and problem solving skills to help reducing behavioural problems in the child (The Behavioural Insights Team, 2016). These programs use peer-to-peer training model in communities to improve parent-child interactions and regulate their emotions. This is a private measure to tackle variables such as parenting quality and development of role models that might be applicable as a global government initiative.

Another impressive action is Chile Crece Contigo, which is a social protection system for early child development aimed at eliminating socioeconomic differences. This program offers direct action to help the poorest in essential pillars like education, maternity care and health services. A research conducted by LIIS, highlighted the importance of this type of programs by emphasizing the intergenerational transfer, namely low educated parents may invest less on child’s education, which impacts negatively on his/her career opportunities and hence, might limit the access to a high income level and resources position which in fact influences his/her health choices.

In fact, poor health conditions are identified as a factor of downward mobility due to the lost labour of the individual, which increases household dependency ratios (Bird, 2007). Moreover, child nutrition and health status are critical drivers in determining the irreversibility of poverty transfers, which underline policies like Chile Crece Contigo as a way to provide balanced development for children from a low-income background.

To sum up, children growing up in low-income families face several challenges such as low education, poor health care, low life expectancy and household conflict. Thus, the government should intervene by adopting development driven policies which should include anti-discrimination measures and the provision of good quality public services. This might be a way to limit the intergenerational transmission of poverty and to improve the functioning of labour markets so that intergenerational economic mobility may be possible.

 Inês Pedroso

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Author: studentnovasbe

Master student in Nova Sbe

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