The Intergenerational Persistence of Poverty in High-Income Countries

Zachary Parolin (), Rafael Pintro Schmitt, Gøsta Esping-Andersen and Peter Fallesen
Additional contact information
Zachary Parolin: Bocconi University
Rafael Pintro Schmitt: University of California, Berkeley
Gøsta Esping-Andersen: Bocconi University

No 16194, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Exposure to childhood poverty increases the likelihood of adult poverty. However, past research offers conflicting accounts of cross-national variation in the strength of the intergenerational persistence of poverty and the mechanisms through which it is channeled. This study investigates differences in intergenerational poverty in the United States (U.S.), Australia, Denmark, Germany, and United Kingdom (UK) using administrative- and survey-based panel datasets. We introduce a framework to decompose intergenerational poverty into family background effects, mediation effects, tax/transfer insurance effects, and a residual poverty penalty. Intergenerational poverty in the U.S. is four times stronger than in Denmark and Germany, and twice as strong as in Australia and the UK. Intergenerational poverty in Denmark is primarily channeled through family background effects, but persists in the UK and Germany through mediators such as adult education and employment. The U.S. disadvantage is not channeled through family background, mediators, neighborhood effects, or racial/ethnic discrimination. Instead, the U.S. has comparatively weak tax/transfer insurance effects and a more severe residual poverty penalty. Should the U.S. adopt the tax/transfer insurance effects of peer countries, its intergenerational poverty persistence could decline by more than one-third. The study offers a foundation for renewed research on the intergenerational persistence of poverty in high-income countries.

Keywords: poverty; intergenerational mobility; social mobility; stratification (search for similar items in EconPapers)
JEL-codes: I32 I38 (search for similar items in EconPapers)
Pages: 81 pages
Date: 2023-05
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published online as 'Intergenerational persistence of poverty in five high-income countries' in: Nature Human Behaviour , 28 October 2024

Downloads: (external link)
https://docs.iza.org/dp16194.pdf (application/pdf)

Related works:
Working Paper: The Intergenerational Persistence of Poverty in High-Income Countries (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp16194

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().