The Long-Term Effect of Childhood Poverty

This paper uses variation among siblings to identify the effect of childhood poverty on long-term outcomes such as income, earnings, job type, employment, and having children. Childhood poverty is found to have large negative effects on labour market outcome and small effects on non-labour market outcomes. The marginal effect of one additional year of childhood poverty from the age of 13 to 15 is found to decrease the disposable income of the individual by 6.4% around the age of 30. The effect size is found to have an inverse u-shape in the age of the child, peaking in the early teens, but with a notable spike at the year of birth. The effect is not found to be accentuated by other shocks to the household, such as divorce, parental job loss, or relocation. Yet, a social gradient is detected, where children from low educated parents are harmed more than others.