How Much Does Childhood Poverty Affect the Life Chances of Children?

This study examines the impact of the level of income and the timing of economic deprivation in childhood on completed schooling in the US. Data were obtained from the Panel Study of Income Dynamics among a sample of 1323 children born during 1967 and 1973 and 328 sibling pairs. The average level of income increased across childhood. Income at ages 11-15 years was about 40% higher than income at ages 0-5 years. Only 39% of children with family incomes below $15000 in early childhood had incomes that low in adolescence. Almost 50% of siblings had 15-year average incomes that differed by over $5000. Multivariate analysis reveals that children with family incomes of $15000-25000 completed .82 years more schooling had 4.1 times greater odds of completing high school and had an insignificantly lower risk of a nonmarital birth. At the next higher income level children had a half a year higher schooling level than children with income of $15000-25000. A $10000 increase to income averaged over the 0-5 years of life for children in low-income families was associated with a .81 year increase in completed schooling and a 2.9 times increase in the odds of finishing high school. These estimated effects were larger than at ages 6-10 years and 11-15 years. Parental income during adolescence was less important in the completion of high school and more important for college decisions. Children with early childhood family incomes of $15000-25000 averaged .66 years more schooling than children in the lowest income group. Stage-specific income from all childhood stages did not strongly predict nonmarital childbearing. High income during adolescence enabled children to enter college but did not predict completion of college. Sibling findings supported the individual-based findings that economic conditions in early childhood particularly among low-income families were key determinants of completed schooling.