Children who grow up in financially disadvantaged households are significantly more likely to experience poverty during their adult years, with a new Australian study finding that they face more than five times the risk of remaining poor in their 20s and early 30s compared with those raised in relatively better-off families.
The research highlights how economic hardship during childhood can have long-term consequences, affecting an individual’s financial stability well beyond their school years. The findings suggest that poverty is not merely a temporary condition for many children but can continue across generations, limiting opportunities to improve their economic circumstances.
According to estimates by the Australian Council of Social Service (ACOSS) and the University of New South Wales (UNSW Sydney), around 757,000 Australian children below the age of 15 were living in poverty during 2022-23. This accounts for approximately one in every six children in the country. The number is higher than the combined population of Geelong, Newcastle and Wollongong.
The study, published in the journal examined data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, which has been tracking Australian households since 2001. Researchers analysed information on 2,205 individuals whose family incomes were recorded over at least three years of their childhood and whose financial circumstances were subsequently assessed at least once after they turned 24.
The researchers compared childhood household income levels with the financial position of participants between the ages of 24 and 35. Since Australia does not have an officially defined poverty line, the study adopted a relative income-based measure commonly used in international research. It considered disposable household income while adjusting for the number of people in a family.
The findings revealed that individuals who experienced poverty during childhood had a 27% probability of living in poverty during early adulthood. In comparison, the corresponding likelihood among those raised in households earning between 150% and 200% of the poverty threshold was just 5%.
This represents a difference of 22.4 percentage points and indicates that children raised below the poverty line face more than five times the risk of experiencing financial hardship as adults.
The research also found that children from families living just above the poverty threshold were vulnerable to similar difficulties. Those raised in households earning between 100% and 150% of the poverty line had an early-adulthood poverty rate 8.7 percentage points higher than the reference group. However, researchers did not find a statistically significant difference between children from households just below the median income and those from comparatively higher-income families.
Children growing up in single-parent households were found to face particularly difficult circumstances. Australia has approximately 1.2 million single-parent families, and poverty levels among their children are considerably higher than those in households where both parents are present.
ACOSS-UNSW estimates for 2022-23 showed that 37% of children living in single-parent families were below the poverty line, compared with 11% of children in families with partnered parents. Researchers attributed this vulnerability partly to the additional financial and domestic responsibilities shouldered by a single parent, who often has to manage childcare and household duties without another adult sharing the burden.
The study further observed that people who experienced economic disadvantage during childhood were generally less likely to obtain post-school qualifications, secure employment or live with a partner. They were also more likely to become single parents themselves. Certain health indicators were also found to be associated with their childhood economic circumstances.
Although these factors contributed to the risk of poverty in adulthood, researchers found that the connection between childhood poverty and financial hardship later in life remained substantial even after accounting for these circumstances.
The findings underline the importance of addressing financial insecurity among families with children rather than focusing exclusively on poverty among adults. Researchers said measures aimed at improving household incomes, particularly for single-parent families, could help prevent economic disadvantage from continuing into subsequent generations.
Australia’s government had increased financial assistance for low-income single parents in 2023 by extending eligibility for the Parenting Payment until the youngest child turns 14. The move was expected to benefit at least 57,000 primary carers, most of them women.
However, researchers said additional measures, including targeted increases in Family Tax Benefit Part A, would be necessary to provide further support to vulnerable households.
They also called for more long-term research tracking individuals from childhood into adulthood to better understand the factors that keep families trapped in poverty and identify policies that can help break the cycle.
