Inequalities Are Inherited, But Some Countries Erase Them
Poverty is not just a challenge of the present – it often follows children into adulthood, perpetuating a cycle of hardship. A new study by Zachary Parolin (Bocconi Department of Social and Political Sciences), written in collaboration with Gøsta Esping-Andersen (formerly at the same Bocconi Department), Rafael Pintro-Schmitt (PhD student at UC Berkeley) and Peter Fallesen (Stockholm University) and published in Nature Human Behaviour, examines this intergenerational persistence of poverty across five high-income countries: the United States, Australia, Denmark, Germany, and the United Kingdom. The research reveals stark differences in how effectively these nations help children escape poverty, highlighting the critical role of public policies.
The findings are compelling. In the United States, growing up in poverty makes a child 43% more likely to be poor as an adult compared to someone who did not experience poverty. Denmark, by contrast, shows a persistence rate of just 8%, thanks to its robust social systems. Australia, the United Kingdom, and Germany sit between these extremes, with persistence rates of 21%, 16%, and 15%, respectively.
Why the US struggles and Denmark thrives
The study points to key drivers behind these variations. In Denmark, public systems effectively reduced poverty by offsetting family disadvantages. The United States, by contrast, relies heavily on families to overcome challenges, with little state intervention to alleviate economic hardship. Germany and the UK showed moderate success by combining public support with lower baseline levels of childhood poverty, while Australia’s persistence rates reflect its mixed approach to social policy.
In the US, however, weak social safety nets fail to bridge the gap. The study highlights what it calls a “residual poverty penalty” in America, a measure of unexplained disadvantages tied to childhood poverty. Even when accounting for factors like education, employment and family structure, American children from poor families remain at a severe disadvantage. This suggests that systemic issues – like limited access to affordable healthcare and inadequate support systems – play a significant role. “If the US adopted the tax and transfer policies of countries like the UK, its poverty persistence could fall by over a third,” Zachary Parolin says.
How the study was conducted
To uncover these patterns, Parolin and his co-authors analyzed extensive data tracking individuals from childhood into adulthood. They examined how factors like family structure, parental education and state policies affected poverty outcomes. The research also looked at “mediators” like education and employment, and how effectively taxes and transfers (social benefits) reduced the risk of poverty.
Their approach allowed for a unique decomposition of the problem, showing not only how strongly poverty persists but also why it does. In Denmark, for instance, the study found that even when family background heavily influenced outcomes, state interventions often erased these effects. Meanwhile, in the US, limited social programs leave families to bear the brunt of poverty’s consequences, with little state intervention to bridge the gap.
A call to action
This study underscores an inescapable truth: poverty persistence is not inevitable, and public policies make a difference. Denmark’s example shows that investing in education, healthcare and family support can transform outcomes for future generations. Conversely, the United States demonstrates the heavy costs of neglecting these systems. For policymakers, the message is clear. Breaking the cycle of poverty requires strengthening safety nets and addressing systemic barriers. As Zachary Parolin puts it, “The story of poverty is shaped, in large part, by the policies we choose. We have the tools to break the cycle – it’s largely a question of political will.”
