Intergenerational Disadvantage: Learning about Equal Opportunity from Social Assistance Receipt

48 Pages Posted: 18 Oct 2017

See all articles by Deborah A. Cobb-Clark

Deborah A. Cobb-Clark

School of Economics, University of Sydney; IZA Institute of Labor Economics

Sarah C. Dahmann

University of Melbourne - Melbourne Institute: Applied Economic & Social Research; IZA Institute of Labor Economics; University of Melbourne - ARC Centre of Excellence for Children and Families over the Life Course

Nicolas Salamanca

Melbourne Institute: Applied Economic & Social Research, the University of Melbourne; IZA; University of Melbourne - ARC Centre of Excellence for Children and Families over the Life Course

Anna Zhu

RMIT University

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Date Written: October 15, 2017

Abstract

We use variation in the extent of generational persistence across social assistance payments to shed light on the factors leading to intergenerational disadvantage. Our administrative data come from the Australian social security system and provide us with detailed social assistance trajectories – across the entire social safety net – for a birth cohort of young people and their families over an 18-year period. We find that young people are 1.8 times more likely to need social assistance if their parents have a history of receiving social assistance themselves. These young people also receive more intensive support; an additional $12,000 over an 8-year period. The intergenerational correlation is particularly strong in the case of disability payments, payments for those with caring responsibilities, and parenting payments for single parents. Disadvantage stemming from parents’ poor labor market outcomes seems to be easier for young people to overcome. This suggests that parental disadvantage may be more harmful to children’s later life outcomes if it is more strongly driven by circumstances rather than personal choice.

Keywords: Intergenerational Correlations, Socioeconomic Disadvantage, Social Assistance

JEL Classification: H53, I38, J62

Suggested Citation

Cobb-Clark, Deborah A. and Dahmann, Sarah C. and Salamanca, Nicolas and Zhu, Anna, Intergenerational Disadvantage: Learning about Equal Opportunity from Social Assistance Receipt (October 15, 2017). Melbourne Institute Working Paper No. 28/17, Available at SSRN: https://ssrn.com/abstract=3053620 or http://dx.doi.org/10.2139/ssrn.3053620

Deborah A. Cobb-Clark

School of Economics, University of Sydney ( email )

606 Social Sciences Bldg. (A02)
The University of Sydney
Sydney, NSW 2006
Australia
61435061387 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Sarah C. Dahmann

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

IZA Institute of Labor Economics

University of Melbourne - ARC Centre of Excellence for Children and Families over the Life Course

Nicolas Salamanca (Contact Author)

Melbourne Institute: Applied Economic & Social Research, the University of Melbourne ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University of Melbourne - ARC Centre of Excellence for Children and Families over the Life Course ( email )

Anna Zhu

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

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