Pathways of Disadvantage: Unpacking the Intergenerational Correlation in Welfare

Abstract

This research studies the pathways that link welfare receipt across generations in Australia. Our analysis not only calculates the intergenerational correlation in welfare, but also quantify the portion of that correlation that operates through key mechanisms.Our data come from administrative welfare records for young and their parents over nearly two decades which have been linked to survey responses from young people at age 18.Together, the pathways we consider jointly account for nearly a third (32.2 percent) of the intergenerational correlation in welfare participation and more than half (52.6 percent) of the link between parental welfare participation and young people's total welfare benefits.The primary mechanism linking welfare receipt across generations is the failure to complete high school. Young Australians in welfare-reliant families experience more disruptions in their schooling through school changes, residential mobility, school expulsions and school suspensions. They also receive less financial support from their families. Both of these negatively affect their chances of completing high school andavoiding the welfare roll.Young Australians' risk-taking behavior -for example, smoking, illicit drug use, delinquency and pregnancy -is also a key pathway in transmitting welfare reliance across generations. Physical and mental health, academic achievement, and work-welfare attitudes, in contrast, have a more modest role in intergenerational welfare. The lack of strong evidence that work-welfare attitudes drive the intergenerational correlation in welfare receipt is at odds with cultural explanations of intergenerational welfare which attribute welfare dependency to the values that children acquire from their parents and neighbors.Taken together, our results present a clear focus for policy action; schools, communities and governments must find better ways to support the education of children in welfarereliant families. The importance of parental financial support in transmitting disadvantage across generations calls into question the wisdom of Australian policies that increasingly shift the financial burden of supporting young people from the public purse to their families.

Introduction

“…Young people from families reliant on welfare are much more likely to receive welfare support themselves. Bubonya and Cobb-Clark (2019) find that the main mechanism is incomplete high school, due to disrupted educational conditions and a lack of financial support. The Australian welfare system has been categorised as broadly consistent with a liberal welfare democratic regime, according to Esping-Andersen's typology (1990).…”

The Hospital Burden Associated With Intergenerational Contact With the Welfare System in Australia

“…26 Despite considerable research documenting that low income is associated with poor health, 4 , 7 , 8 , 27 few studies examine IWC and health. 11 , 28 One study investigated the mediating role of health (limited to body mass index and self-reported mental health and physical exercise) in IWC but did not report health outcomes for individuals with IWC. 28 Previous studies reporting that WC is associated with poorer health are limited by quality (eg, self-reported measures, 29 , 30 selective sample populations, 28 , 29 , 30 , 31 no longitudinal design 15 ), lack of intergenerational perspective, 29 , 31 , 32 , 33 , 34 , 35 and WC definitions that include any payment type, such as those considered near-universal.…”

“…11,28 One study investigated the mediating role of health (limited to body mass index and self-reported mental health and physical exercise) in IWC but did not report health outcomes for individuals with IWC. 28 Previous studies reporting that WC is associated with poorer health are limited by quality (eg, self-reported measures, 29,30 selective sample populations, [28][29][30][31] no longitudinal design 15 ), lack of intergenerational perspective, 29,[31][32][33][34][35] and WC definitions that include any payment type, such as those considered near-universal. 11,[30][31][32][33][34][35] The policy problem of IWC in Australia has been examined by labor economist Cobb-Clark and colleagues, 21 who defined and measured IWC to better understand how disadvantage is transmitted from parents to offspring.…”

“…The idea that reliance on welfare is transmitted from one generation to the next is not unique to Australia and has been documented in the United States, Canada, Nordic countries, and United Kingdom . Despite considerable research documenting that low income is associated with poor health, few studies examine IWC and health . One study investigated the mediating role of health (limited to body mass index and self-reported mental health and physical exercise) in IWC but did not report health outcomes for individuals with IWC .…”