Childhood Poverty and Its Lasting Effects on Adult Outcomes

Introduction

Beyond the financial hardships that arise when young children live in poor or persistently inadequate households, children raised in poverty can easily perpetuate a never-ending cycle when they reach adulthood. Prior research suggests that children who are born poor and remain persistently poor are considerably more likely to stay poor as adults, drop out of school, experience teenage premarital births, and have unstable employment histories than those who were not poor at birth (Ratcliffe and McKernan 2010). This earlier research focused on the first cohort of children examined here — those born between 1967 and 1974 who turned thirty between 1997 and 2004.

An important question is whether this relationship has endured over time. Although data are not yet available to track outcomes through age thirty for children born in the subsequent two cohort groups (1975–81 and 1982–89), researchers can observe whether members of those cohorts failed to finish school or experienced a teenage premarital birth (women only). Both of these adolescent outcomes serve as indicators of future difficulties, as discussed below.

Current Childhood Poverty and Its Effects on Adult Outcomes

The relationship between child poverty and adult outcomes in more recent cohorts mirrors that of earlier cohorts. Children born to poor parents are considerably more likely than their counterparts to drop out of school and to have a child outside of marriage as a teenager. Across all three cohorts combined (born 1967–89), nearly three times as many children born into poor and economically disadvantaged families — compared to those not born poor — dropped out of school (30% versus 11%) and experienced teenage premarital births (26% versus 9%). This roughly 3-to-1 ratio holds across all three cohorts.

School non-completion and premarital childbirth have nonetheless improved for the most recent cohort of children (born 1982–89) — not only for poor children but also for those not poor at birth. This improvement is encouraging, particularly if the downward trend continues. However, among the most recent group of poor children (born 1982–89), nearly one in four (24%) did not finish school, and one in five (21%) girls experienced a teenage premarital birth (Ratcliffe and McKernan 2012).

Analysis of adult outcomes by duration of childhood poverty — never poor, sometimes poor, and persistently poor — presents a consistent picture. Longer periods of poverty are associated with a higher probability of school non-completion and teenage premarital childbirth. Outcomes for persistently poor children improved for the most recent cohort, though only after worsening in the middle cohort. Among the most recent cohort (born 1982–89), just 3% of never-poor children did not finish school, compared to nearly ten times as many persistently poor children (29%). The disparity for premarital childbirth is equally troubling: 2% of never-poor girls experienced a teenage premarital birth, compared to 22% of persistently poor girls (Ratcliffe and McKernan 2012).

Does childhood poverty at birth, prolonged childhood poverty, or both reveal barriers to long-term economic success — or is one simply a proxy for the other? Additional analyses that simultaneously examine poverty status at birth and poverty duration show that both are independently associated with higher rates of school non-completion and teenage premarital childbirth. Compared to being poor at birth, extended exposure to poverty is more strongly associated with these adverse early-adulthood outcomes. Children who were poor at birth are five to ten percentage points more likely than children not poor at birth to drop out of school or give birth as an unmarried teenager; persistently poor children are approximately twenty percentage points more likely than children not persistently poor to experience these outcomes (Ratcliffe and McKernan 2012).

High School Non-Completion and Educational Development

Limited educational attainment and early childbearing can constrain future economic prosperity and signal future employment difficulties and adult poverty. To examine this relationship, researchers have also analyzed how school non-completion by age twenty and premarital childbirth relate to employment and poverty in early adulthood, among children born between 1967 and 1974. The findings reveal a strong connection. Those without a high school diploma by age twenty are 50% more likely to have sporadic employment between ages twenty-five and thirty, and seven times more likely to be persistently poor between ages twenty-five and thirty, than those who completed school. Similarly, girls who experienced a teenage premarital birth were 50% more likely than those without such births to experience unstable employment and six times more likely to be persistently poor between ages twenty-five and thirty. School non-completion and early premarital childbearing thus produce serious long-term economic consequences that can affect the next generation of children (Ratcliffe and McKernan 2012).

The longer a child lives in poverty, the more likely he or she is to reach age twenty without completing school. Compared to individuals who were never poor as children, those who were poor for half of their childhood years are seven percentage points more likely not to finish school. For those who were poor between 25% and 75% of their childhood years, the figures are four and eight percentage points, respectively. These differences are substantial relative to the baseline rate of school non-completion among never-poor children — 8%. In other words, increases of four to eight percentage points represent raises of 50% to 100% above that baseline (Ratcliffe and McKernan 2012).

Experiencing poverty in the earliest years (birth through age two) is associated with reduced educational attainment. Children who are poor during these first years are 4.5 percentage points (approximately 30%) less likely to complete school than their counterparts who first experience poverty later in childhood. Interestingly, experiencing poverty for the first time after age two — when controlling for total duration of poverty — is not significantly associated with reduced academic attainment. This finding is consistent with other research suggesting that children's environments in the earliest years of life shape their development. It also aligns with studies finding that parental income during early childhood is associated with children's reduced academic achievement (Duncan et al. 1998).

Children frequently follow in their parents' educational footsteps. Compared to teenagers whose parents completed some education beyond high school, children whose parents did not finish school are 17.6 percentage points more likely to enter their twenties without completing school themselves, and those whose parents completed only high school are 7.2 percentage points more likely not to finish school. Consistent with the broader argument of this paper, low parental educational attainment is strongly associated with a reduced likelihood that children will achieve economic success (Ratcliffe and McKernan 2012).