How to break the poverty cycle
If you're between 25 and 35 and grew up in poverty, there is a greater-than-even chance that you are in poverty yourself. As a result, all the children who live with you are also growing up in poverty — and so the cycle of intergenerational poverty persists.
Why it matters: The U.S. poverty rate among young adults — which is to say, the demographic most likely to be parents to young children — is a sobering 17.9%, much higher than in other rich countries. (It's 9.8% in Germany, for instance.) But the intergenerational poverty rate is vastly higher.
Between the lines: In a sense, that's good news, because it shows that the problem is fixable. An important new paper considers and rejects a series of possible explanations for the extreme amount of intergenerational poverty, and concludes that one cause eclipses all others — the lack of government transfers to the poor.
What they found: "The strength of intergenerational poverty is not systematically related to the extent of childhood poverty," the authors found — which is to say, intergenerational poverty in America isn't high just because poverty in general is high.
- Access to higher education, neighborhood effects and even racial effects are all negligible.
- Also ruled out: "wealth, home ownership, physical health, union membership or past incarceration."
The bottom line: It all comes down to fiscal policy. "Direct income transfers from the state are among the most powerful interventions in addressing poverty and inequality," conclude the authors.