POVERTY: New Zealand: Poverty trap set at birth - study

Simon Collins Jan 18, 2012

 Wealth-gap problems are growing. Photo / Thinkstock

New Zealand researchers have put hard numbers to the adage that success breeds success - and failure breeds failure.
A long-term study of 1265 children born in Christchurch in 1977 has found that those whose families were poor in their first 10 years of life earned about $20,000 a year less by the age of 30 than those who grew up in rich families.
Those from poor families were more likely to leave school without qualifications, have babies before they were 20, commit crimes, go on welfare and have addiction and other mental health problems in adulthood.
Most of these effects were explained by factors which tended to vary in line with family incomes, such as parents' education, addictions, criminality and marital conflict and breakup, and the children's own intelligence.
But study director Professor David Fergusson said the effects of childhood income on later educational and career achievement persisted even after allowing for all other factors.
"So in a sense success or failure drives educational and economic success or failure, but the things that drive behavioural outcomes are not so much income and are more familial and personal," he said.
"It could be that competent, bright families transmit their skills to their children and also earn higher incomes.
"It could also be that being bred in a high-income family provides children with role models and resources for both educational achievement and career success."
Deputy Prime Minister Bill English and Maori Party co-leader Tariana Turia are setting up a ministerial committee on poverty under the Maori Party's post-election agreement with the National Party.
The study results are reported in a newsletter published by Children's Commissioner Dr Russell Wills, who has said that attacking child poverty should be the first of seven goals in an "action plan" arising out of a Government paper on vulnerable children.
The newsletter also reports a Social Development Ministry finding that in 2010, 26 per cent of children lived in "poor" families earning under 60 per cent of the net median income after housing costs - down from a peak of 30 per cent of children in 2001, but still roughly double the proportion in poverty during the 1980s when the children in the Christchurch study were growing up.
Professor Fergusson said children being born in poor families today might face even worse outcomes than their parents born in the 1970s and 80s because of the greater disparity in earnings.
The study asked detailed questions about people's lives which also enabled the researchers to diagnose whether they had depression, anxiety disorder, drug or alcohol addictions or anti-social behaviour.
On average, those from poor families had slightly more of these disorders than those from rich families.
Professor Fergusson said the study showed that income inequality and behavioural issues, such as parents' addictions, both had to be tackled to fix social problems.
"For example, increasing the income of substance-using parents may be counter-productive since it will give them more access to purchasing alcohol or drugs," he said.
A spokesman for Mr English said the poverty committee would focus on "providing opportunity through things like education and jobs and ensuring we are getting the best results from the hundreds of millions of dollars already being spent on social service delivery".
Schooling
Almost 40 per cent of those in the poorest fifth of families left school without qualifications, compared with fewer than 10 per cent of those in the richest fifth.
Pregnancy
A third of those from the poor families but fewer than a tenth of those from rich families fell pregnant, or got someone pregnant, before they were 20.
Crime
A third of those from poor families, but only a sixth from rich families, committed a violent or property crime between the ages of 18 and 30.
Welfare
20 per cent of those from poor families, but only 4 per cent from rich families, spent some time on welfare before they were 30.
Income
Those from poor families earned an average of just under $40,000 a year by age 30, while those from rich families averaged $60,000.
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