Poverty and Adverse Peer Relationships among Children in Germany: a Longitudinal Study

Low socioeconomic status is regarded as a risk factor for social exclusion and victimization of children, but empirical evidence is mixed. Using longitudinal data from parent-child dyads of the German Family Panel (pairfam), we apply both pooled OLS (POLS) and fixed-effects regression models to test whether children experience more peer relationship problems if they live in a household with adverse economic conditions, i.e. with a household equivalence income below the poverty line. As fixed-effects models are based on intraindividual change over time, it is precluded that time-constant attributes of the child and its environment bias the estimation. We also estimate POLS models to link our results to prior research and to identify the role of time-constant factors such as migration background and parental education. We find a significant association between poverty and adverse peer relationships in the POLS estimations, but not in the within (fixed-effects) estimations. Parental education and family structure are found to significantly increase the likelihood of peer relationship problems, whereas this is not the case for migration background. Our findings imply that while children from disadvantaged families experience more adverse peer relationships, poverty itself is not the cause, but rather factors related to social status.