The Effect of Parental in-Work Poverty on Child Development.

Alicia García Sierra , University of Lausanne

Growing up in poverty has been consistently shown to negatively affect children’s development. This relationship has been usually explained in terms of the material deprivation that certain families encounter, especially those who are excluded from the labour market. The existing literature, however, fails to disentangle whether is it the absence of a job itself the main factor driving the effect of poverty on child development. This paper sheds light on this issue by examining the effect of parental in-work poverty on child development, which has been previously overlooked. This is relevant because a large proportion of the children who grow up in poverty are in families with at least one working parent and yet the effect of this type of poverty on children’s development is unclear. Using data from the US National Longitudinal Survey (NLS-CYA) and the Growing Up in Ireland (GUI) datasets, I implement a series of two-way fixed-effects (individual and time) models that estimate the effect of growing in a house at risk of in-work poverty on the children’s developmental processes. Preliminary findings suggest that when employed parents’ income gets under 60% of the national median equivalised disposable income (poverty threshold), their children’s development is reduced by about one-tenth of a standard deviation. The negative effect of in-work poverty on child development is smaller than the effect of poverty for unemployed parents, although still substantively and statistically relevant.

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 Presented in Session 88. Money and Inequalities in Families