Knowledge and Resource Hub
12 December 2018

Low-income and poverty dynamics: Implications for child outcomes

This research used data from the first five waves of the Longitudinal Study of Australian Children (LSAC) to examine the association between childhood poverty and a range of children’s developmental outcomes. There was a strong negative association between poverty and children’s developmental outcomes. For example, poverty was associated with poorer cognitive development, and particularly in the very early years, which had flow-on effects for academic achievement into later childhood. Both episodic and persistent poverty experienced at 0-1 substantially negatively impacted Year 3 NAPLAN scores, amounting to 23 to 25 per cent of one year of schooling for reading and numeracy. Also the psychological adjustment of children was affected, with those experiencing poverty showing clinically significant problems at a substantially higher rate, and poorer health. The negative effects associated with low income and poverty carry a significant cost for individuals and families, as well as the broader community. There are also clear costs associated with children’s development and wellbeing—the impacts of which are likely to be amplified later in life for the children who experienced poverty and also the wider society. The existing evidence about the relationship between poverty and child outcomes suggests that it is not completely clear whether it is low income itself, or the complex set of circumstances that lead to poverty, that often results in poorer developmental outcomes. Improved knowledge of the mechanisms in this relationship will assist in determining the most effective way to improve the life chances of children whose families experience financial disadvantage.