Social Transfers, Changing Family Structure, and Low Income Among Children

Statistics Canada Working Paper 82

40 Pages Posted: 31 Jul 1996

See all articles by Garnett Picot

Garnett Picot

Statistics Canada

John Myles

Florida State University - Department of Sociology

Date Written: September 1995

Abstract

Our aim in this paper is to resolve a paradox. Since the 1970s, there has been a downward secular trend in the average real and relative earnings of young adults under the age of 35. Despite the fact that most young children live in households headed by adults under 35, there has been no corresponding secular rise in the incidence of low income among children. Rather child poverty has followed the usual fluctuations of the business cycle.

We show that the relative stability in child poverty rates in the face of declining labor market earnings is a result of two factors. First, the decline in market income in young households with children has been offset by rising transfers. Since the 1970s, social transfers have replaced earnings as the main source of income among low income families with children.

Second, changes in the fertility behavior and labor market characteristics of young adults have sharply reduced the risk of young children growing up in low income households. Today's young parents are better educated, working more hours, having fewer children, and postponing child-birth until later ages when earnings are higher. Although more children do find themselves in single parent families, this change has been swamped by other changes in family patterns and labor market behavior that have reduced the risk of child poverty.

Thus, the upward pressure on low income among children stemming from the labor market has been offset by social transfers, on the one hand, and by changes in family formation and the labor market behavior of young adults, on the other. Except for cyclical variations, the result has been relative stability in the incidence of low income among children over the 1980s and early 1990s. Whether these offsetting patterns will continue in the last half of the 1990s remains to be seen.

JEL Classification: J11, J12, J13, J18, H53

Suggested Citation

Picot, Garnett and Myles, John, Social Transfers, Changing Family Structure, and Low Income Among Children (September 1995). Statistics Canada Working Paper 82, Available at SSRN: https://ssrn.com/abstract=3202 or http://dx.doi.org/10.2139/ssrn.3202

Garnett Picot (Contact Author)

Statistics Canada ( email )

Ottawa, Ontario
Canada
613-951-8214 (Phone)
613-951-5403 (Fax)

John Myles

Florida State University - Department of Sociology ( email )

Tallahassee, FL 32306
United States
850-644-5418 (Phone)

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