Exposure to Childhood Poverty and Racial Differences in Economic Opportunity in Young Adulthood

Abstract

Young adults in the United States, and young Black adults especially, experience high poverty rates compared to other demographic groups. Prior research has largely attributed racial disparities in young adult poverty to differential attainment of benchmarks related to education, employment, and family formation. This study, in contrast, investigates how racial differences in exposure to childhood poverty shapes racial differences in young adult poverty. Using data from the Panel Study of Income Dynamics (PSID), we find that childhood poverty has large direct and indirect effects on young adult poverty. Indirectly, childhood poverty affects young adult poverty through its negative association with education, employment, and family formation benchmarks. Directly, each additional year of childhood poverty increases the likelihood that a young adult lives in poverty, independent of the benchmarks. Black children experience poverty at three times the rate as White children, face three times the rate of poverty in young adulthood even if they meet all three benchmarks, and experience a persistent negative effect of childhood poverty on young adult poverty. Racial differences in exposure to childhood poverty are as consequential as differential attainment of education, employment, and family formation benchmarks in shaping racial differences in young adult poverty.

Discussants:

• Valeria Ferraretto, PhD student in Sociology and Social Research
• Austeja Kazemekaityte, Department of Economics and Management