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• 1. Why Do Children Move into and out of Low Income: Changing Labour Market Conditions or Marriage and Divorce Archived

  Articles and reports: 11F0019M1999132

  Geography: Canada

  Description:

  Child poverty is high on the government's agenda. In order to reduce the rate of low-income among children, one has to either reduce the number of children flowing into low-income, or increase the number flowing out. But what is behind such movement? Most analysts would immediately think of job loss among the parents, but obviously divorce and remarriage can also play a role. In order to favourably alter the flows, one has to have some understanding of what is driving them. This paper asks to what extent this movement of children is determined by (1) changes in family status of the parents of children, or (2) changes in the parent's labour market conditions (i.e. job loss and gain, changes in hours of work or wages). We find that for an individual child, a divorce or marriage can have a tremendous influence on the likelihood of entering or exiting low-income. At the level of the individual, changes in family composition (when they occur) are more important than changes in jobs held by parents. However, changes in family status are relatively infrequent compared to labour market changes. Parents are much more likely to lose or find jobs, and experience changes in hours worked or wages, than they are to marry or divorce. When this is accounted for we find that, in the aggregate, flows of children into and out of low income are associated roughly equally with family compositional changes and changes in wages and hours worked.

  Release date: 1999-04-21

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• 2. Social Transfers, Changing Family Structure, and Low Income Among Children Archived

  Articles and reports: 11F0019M1995082

  Geography: Canada

  Description:

  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 labour 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 behaviour and labour 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 labour market behaviour that have reduced the risk of child poverty.

  Thus, the upward pressure on low income among children stemming from the labour market has been offset by social transfers, on the one hand, and by changes in family formation and the labour market behaviour 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.

  Release date: 1995-09-30

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• 1. Why Do Children Move into and out of Low Income: Changing Labour Market Conditions or Marriage and Divorce Archived

  Articles and reports: 11F0019M1999132

  Geography: Canada

  Description:

  Child poverty is high on the government's agenda. In order to reduce the rate of low-income among children, one has to either reduce the number of children flowing into low-income, or increase the number flowing out. But what is behind such movement? Most analysts would immediately think of job loss among the parents, but obviously divorce and remarriage can also play a role. In order to favourably alter the flows, one has to have some understanding of what is driving them. This paper asks to what extent this movement of children is determined by (1) changes in family status of the parents of children, or (2) changes in the parent's labour market conditions (i.e. job loss and gain, changes in hours of work or wages). We find that for an individual child, a divorce or marriage can have a tremendous influence on the likelihood of entering or exiting low-income. At the level of the individual, changes in family composition (when they occur) are more important than changes in jobs held by parents. However, changes in family status are relatively infrequent compared to labour market changes. Parents are much more likely to lose or find jobs, and experience changes in hours worked or wages, than they are to marry or divorce. When this is accounted for we find that, in the aggregate, flows of children into and out of low income are associated roughly equally with family compositional changes and changes in wages and hours worked.

  Release date: 1999-04-21

  ---

• 2. Social Transfers, Changing Family Structure, and Low Income Among Children Archived

  Articles and reports: 11F0019M1995082

  Geography: Canada

  Description:

  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 labour 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 behaviour and labour 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 labour market behaviour that have reduced the risk of child poverty.

  Thus, the upward pressure on low income among children stemming from the labour market has been offset by social transfers, on the one hand, and by changes in family formation and the labour market behaviour 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.

  Release date: 1995-09-30

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