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Branded for life: The long reach of childhood poverty
POSTED 25 FEBRUARY 2010

Economic insights

When does poverty matter most to growing children? In a study published in January, Greg Duncan, a professor of education at the University of California at Irvine, correlated adults' current economic condition with their economic status during childhood. "We wanted to see whether there were any strong links, approaching causation, not just association, between economic deprivation at different ages, and adult economic outcomes," says Duncan.

Black and white photo of a building with many windows, some broken, security fences at the bottom
Crime can be a cause and effect of childhood stress. Here's a juvenile jail in Detroit, Michigan.

Those outcomes were measured by earnings, working hours, and school completion. Duncan found that "all the action" was related to the mother's income from the year before the child's birth until age five. For poor kids, the statistics associated a $3,000 increase in annual income at this time with a 17 percent rise in earnings when the kids were adults.

Other problems often associated with poverty, like out-of-wedlock births or committing crime, did not correlate as neatly with early income, Duncan says (see #8 in the bibliography).

Through statistical legerdemain, Duncan says he and his colleagues tried to remove possible confounders. "We were able to isolate the effects of early childhood income by controlling for an extensive list of family conditions, the education of the parents, the test scores for parents [typically the mother] and the family structure."

The study was not equipped to answer the inevitable "why" question, Duncan admits. One category of explanation, he says, focuses on what money can buy, "a better neighborhood, a better learning environment, better day care. The second focuses on depressed parents, harsh parenting, the psychological processes that might be going on in a family with stressful economic conditions. The evidence we saw tends to point toward the first explanation ... but we'd have liked to have had measures" of other relevant factors, such as housing, the home learning environment, and the quality of school and child care.

Chart showing U.S. having much higher rates of children with income below the median, compared to other countries
Chart: UNICEF
When poverty among children under 18 years is defined as having an equivalent household income less than 50 percent of the national median, the United States comes in last.

Throw money at the problem?

If poverty hurts, money helps. Duncan says several "random-assignment experiments" have shown that children in families that got more income through a variety of mechanisms had higher test scores and rates of school graduation.

During the welfare reform of the 1990s, states tried to cajole parents on welfare to work, and some states supplemented wage income by roughly $2,000 per year. Three studies later found improvements in child achievement, but only in states that supplemented the earned income, Duncan says.

Another "quasi-experiment" occurred when the Earned Income Tax Credit, which distributes income to the working poor through the federal income tax system, roughly doubled its payout from 1993 to 1997. According to Magnuson of the University of Wisconsin, significant improvements in school achievement followed the increase. She says a similar thing has happened among Native American tribes after they started getting casino income.

Maybe it's not too shocking: If the problem is a shortage of money, money can help...

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Terry Devitt, editor; Steve Furay, project assistant; S.V. Medaris, designer/illustrator; David Tenenbaum, feature writer; Amy Toburen, content development executive

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