Poverty Matters for Children’s Well-being, but Good Policy Can Help

How Poverty Affects Children’s Development

Researchers have identified multiple pathways through which income can affect children’s development.

While research has historically focused on family environments when identifying pathways by which income affects child development, a variety of powerful structural factors can also increase the risk of family poverty. Industries failing or moving overseas can lead to loss of jobs and earnings, particularly among lower-wage workers in manufacturing, information, and food industries. When machines and technology replace people, individuals may lose their jobs and be forced into low-wage work. Moreover, the rise and fall of industrial sectors can hit some regions harder than others, leading to large geographical disparities in economic conditions, employment opportunities, and rates of poverty.

In addition, Black, Latino, and Indigenous populations in the United States have long experienced limited, unequal access to education, employment, income, housing, health care, and other resources and opportunities, leading to higher levels of child poverty for these groups. Additionally, historic examples of discriminatory policy and practice have endured and evolved over time—including Jim Crow policies, “redlining” (home mortgage denial on the basis of race and government-backed disinvestment in non-White neighborhoods), anti-immigrant sentiment and exclusion, and widespread incarceration. These factors continue to shape the accumulation of assets, access to the resources that promote socioeconomic mobility, and access to opportunities necessary for improved outcomes for children and youth of color. In turn, these myriad disparities have consequences for the healthy development and long-term well-being of a large and important segment of our nation’s children.

With that context in mind, existing research has documented four key pathways through which family income can affect children’s development. The first pathway, aligned with the investment model, focuses on how poverty limits parents’ capacity to invest in necessary resources. The second pathway, aligned with the family stress model, focuses on how the lack of economic resources creates parental stress that can have negative psychological effects on family relational health—and, in turn, children’s outcomes. An accumulating body of research has added evidence for community context as another, third,  pathway of influence on children’s well-being and development; and, more recently, for a fourth pathway that highlights the direct effect of poverty-associated stressors on children’s brain development.

Poverty can affect children by limiting the resources a family has to invest in children and spend on basic needs.

Numerous studies demonstrate that poverty makes it difficult for families to meet basic material needs, such as nutritious food; safe and stable housing; and accessible medical, dental, and vision care. Finding high-quality, affordable, and accessible child care often poses a challenge for workers with lower incomes. Families experiencing poverty also tend to have fewer books and less access to internet services and other educational resources in their homes. Children experiencing poverty are more likely to live in older homes that expose them to environmental toxins, such as lead and other hazards in water and paint. In more extreme cases, children whose parents are unable to afford an apartment or house may experience crowded or cramped conditions, homelessness, or other forms of unstable housing, requiring them to move frequently. This turbulence can be harmful to children, who tend to thrive on structure and stability.

Poverty can affect children through its negative psychological effects on their families.

As might be expected, parents with insufficient incomes to meet their family’s basic needs report higher levels of stress and cognitive overload. This stress, which is often chronic and cumulative, can negatively affect family members’ psychological well-being, leading to higher levels of depressive symptoms, distress, and parental aggravation. These symptoms can, in turn, influence parenting behaviors and strain family relationships, resulting in higher levels of family conflict. The overall effects can be negative on children’s own mental health and other outcomes. In addition, economic hardship tends to be accompanied by other stressful life events and circumstances. This means that children in families with low incomes are more likely to be exposed to higher levels of adverse childhood experiences (ACEs)—such as divorce, parental mental illness, and substance use—and research indicates that experiencing multiple challenges can impact a range of child health and well-being indicators, as well as longer-term health outcomes.

Poverty can influence children through the neighborhood where they grow up.

Families experiencing poverty—particularly Black, American Indian, and Latino families—are more likely to live in neighborhoods with concentrated poverty that offer fewer municipal services, fewer job opportunities, less reliable transportation, fewer health care options, limited access to grocery stores or markets that sell fresh produce, and fewer safe places to run and connect to nature. Children who live in neighborhoods with high concentrations of poverty are also disproportionately likely to attend high-poverty schools with fewer resources, inadequate facilities, and transient leadership. In other words, children experiencing poverty are more likely to live in multiply deserted areas that have suffered from chronic patterns of disinvestment, whether these areas are situated in urban or rural areas. Related to such disinvestment, families living in neighborhoods with concentrated poverty are more likely to report being exposed to community violence and have lower perceptions of safety—itself a form of trauma often associated with adverse developmental outcomes. In sum, a large body of research finds that growing up in neighborhoods in which a high concentration of families experience poverty is associated with negative academic, behavioral, and health outcomes; and that neighborhood characteristics, such as limited municipal services and fewer safe places to play, have been found to (variously) either mediate or exacerbate relationships between child poverty and child outcomes.

Poverty can affect brain circuitry.

Evidence from neuropsychology and related fields has highlighted that chronic exposure to poverty-associated stressors and instability can affect brain architecture, particularly when children are young. Studies have found not only that children from families with low incomes have greater exposure to stressful life events, but also that they have higher levels of stress hormones than their more advantaged counterparts. Over time, these higher levels of stress hormones can lead to dysregulation of the stress response and other physiological systems due to the wear and tear on the body’s need to constantly respond to environmental challenges. Heightened stress levels have been found to be associated with greater emotional reactivity and suppressed immune responses and cognitive functioning, all of which can be adaptive in the face of acute stressors but maladaptive when constantly activated. Persistent exposure to stress in childhood, in particular, has been found to be associated with poorer executive functioning, memory, and language development, and with chronic inflammation.

In these ways, chronic stress has been hypothesized as another pathway by which poverty influences child development, with several studies finding that higher levels of stress hormones at least partially account for the association between poverty and children’s executive functioning. These associations have been found to be logarithmic; that is, increases in income matter more in families with low incomes than in their higher-income counterparts. However, a number of studies (e.g., Cooper & Stewart, 2020; Yeung et al., 2002; Conger et al., 1999; McLoyd, 1990) have found that the impacts of poverty-associated stressors on executive functioning, memory, language, and immune function can be removed or reduced with provision of adequate resources, nurturing caregivers, and income-support interventions.

The Effects of Poverty on Children’s Development

The experience of poverty—especially deep poverty, early poverty, and long-term poverty—has pervasive effects on almost every aspect of children’s development, beginning in pregnancy, continuing into childhood and adolescence, and extending through the transition to adulthood. Taking a whole child perspective, this section summarizes research across developmental domains, including health, academic, and socioemotional outcomes, and discusses long-term outcomes related to childhood poverty.

Childhood poverty is associated with negative health outcomes throughout the lifespan.

Social determinants of health—including neighborhood violence, food insecurity, environmental toxins, and having parents with higher levels of distress—contribute to income-based disparities in health outcomes that emerge early in life, as evidenced by higher rates of infant mortality and lower average birthweights experienced by children born into households experiencing poverty. As children age and interact more with their environments, inequities in access to safe places to play, toxin-free homes and neighborhoods, and health care can exacerbate these early income-based disparities. That is, early income-based disparities in health become more pronounced as children age, due to ongoing exposure to adverse environmental conditions, the cumulative impact of chronic conditions, and limited access to treatment or resources to respond effectively to chronic conditions. For example, childhood poverty is associated with elevated blood lead levels and a higher prevalence of chronic health conditions, such as asthma and obesity, each of which are predictive of negative physical health outcomes throughout the lifespan. Indeed, several studies have found that poor health in adulthood is more strongly related to economic status in childhood (through its impact on child health) than to economic status in adulthood.

These health disparities are particularly concerning among persons of color, as they reflect not only economic and social disadvantages, but also “weathering”—a term used to capture the physical and emotional consequences of experiencing long-term stress and racism, found to undermine health in patterns common among persons of color (e.g., in perinatal risk). As is the case with a number of health outcomes, these differences are moderated through neighborhood characteristics, such as neighborhoods with concentrated poverty and limited access to health care services. However, many of these negative outcomes have been found to be ameliorated by lower exposure to pollutants and improved access to health care, nutritional supports, and income supports.

Childhood poverty is linked with cognitive and academic outcomes.

Given the importance of nutrition and health for early brain development, it is perhaps not surprising that income-related disparities in brain activity and cognitive assessments also emerge in infancy, at ages as early as 9 months. These early disparities in regions of the brain associated with executive function, language development, and memory likely reflect differences in prenatal and early environments, including access to healthy foods and nutrients, exposure to environmental toxins and poverty-associated stressors, access to health care, and the quality of early interactions and caregiving.

Just as early health disparities are predictive of later health outcomes, early income-based differences in cognitive development manifest in school readiness skills, including gross and fine motor skills, social and emotional competence, language and numeracy skills, and memory. Similarly, numerous researchers have identified large income-based gaps in reading and math achievement prior to kindergarten entry. These gaps persist throughout children’s academic journeys, as they experience unequal access to high-quality and safe schools, teachers, curricula, special education evaluations and supports, and other educational resources. In addition, large and consistent negative associations have been found between poverty and other measures of academic success, including school engagement; high school graduation; and college attendance, persistence, and graduation.

Such findings, however, do not indicate that lower incomes inevitably result in lags in cognitive development or lower academic achievement or attainment; rather, the environment of poverty—poverty-associated stressors, structural inequities, and sequelae—is a risk factor for less-than-optimal outcomes. Interventions that address these factors (e.g., income supports, improved access to early childhood education, nutrition assistance, and home visiting programs) have been found to improve school readiness and academic outcomes among children experiencing poverty.

Childhood poverty is associated with negative social, emotional, behavioral, and mental health outcomes.

The environment of poverty and economic hardship also brings considerable stressors that can have a powerful impact on children’s social and emotional adjustment and underlie income-based disparities in assessments of social and emotional skills in the early school years. As children age, children and adolescents in families with low incomes are also more likely than their higher-income peers to report more mental health challenges and higher levels of stress, depressive symptoms, and anxiety. These heightened levels of economic hardship and stress—in combination with already overburdened socioemotional and psychological resources, and experiences of social exclusion and bullying—can lead to greater risk of difficulties in peer relationships and of exhibiting both externalizing and internalizing symptoms.

These income-based disparities in children and youth’s social, emotional, behavioral, and mental health outcomes are often exacerbated by co-occurring stressors. Children who experience poverty are more likely to be exposed to multiple adversities, such as racial and class-based discrimination, neighborhood crime, housing instability, divorce or other forms of family separation, parental mental illness, and household substance abuse. Exposure to multiple adversities is itself a risk factor for depression, anxiety, and behavior problems. Moreover, families with low incomes tend to face significant barriers to accessing mental health services and have fewer financial resources for treatment and support.

As with other outcomes, these effects are not inevitable and can be prevented or ameliorated. Studies find that the relationships between poverty and socio-emotional and behavioral outcomes can be at least partially explained and/or moderated by family processes, including family relationships and conflict, parental well-being, parenting behaviors, neighborhood and school contexts, and the influence of peers. In particular, the presence of stable, supportive caregivers or other adults in a child’s life who provide a nurturing, responsive, and predictable environment for children can be a powerful protective factor that supports resilience in the face of economic and other forms of adversity. Federal programs and policies that support parents—including early care and education programs, home visiting, nutrition, health, housing, income supports, and other social services—are also important in mitigating the effects of poverty on child outcomes.

For some children, the effects of early and persistent childhood poverty can be long-lasting.

Children who experience poverty, especially persistent poverty and poverty during early childhood, are more likely to experience poverty and other forms of economic hardship as adults. For instance, the experience of poverty during one’s childhood has been linked to lower adult educational attainment. Among people who ever experienced poverty during childhood, persistent poverty is associated with a lower likelihood of finishing high school, graduating from college, and being consistently employed at age 25.

In addition, children who experience poverty are more likely to experience poverty themselves as adults. The relationship between intergenerational poverty and economic outcomes is even stronger for Black children. One study found that the Black-White gap in young adult poverty (i.e., higher levels of Black young adult poverty compared to their White peers) is more strongly influenced by the higher levels of child poverty found among Black children than by differences in the achievement of educational and employment benchmarks by early adulthood.

Early life exposure to adverse circumstances, environmental toxins, and socioeconomic disadvantage can affect not only one’s immediate but also longer-term physical health outcomes. Childhood poverty is also associated with life expectancy. One study found that adolescents experiencing poverty at age 18 have a 10.5-year lower life expectancy than their higher-income peers.

While numerous studies provide evidence of the negative, long-term consequences of child poverty, the intergenerational cycle of poverty can be broken. Many people who experienced poverty during childhood fare better as adults, and a growing body of research highlights factors that can help individuals experience social and economic mobility or to escape poverty.

Is the effect of poverty causal?

Studies finding negative consequences associated with poverty conducted by social scientists across the decades (e.g., Brooks-Gunn & Duncan, 1997) have been supported in recent years by new research that incorporates more rigorous methodologies and some experimental evidence.

There is still very limited evidence of direct causal links between poverty and children’s development. However, one experimental study, the Baby’s First Years project, is assessing the effects of providing direct monthly, unconditional cash payments (of $333) to parents of infants and toddlers experiencing poverty; this work has found that payments led to modest increases in brain activity levels associated with learning and development. Evidence is also provided by quasi-experimental research that investigated relationships between policies and interventions that increase income and improvements in child outcomes. For example, evidence is provided by research on welfare reform: An instrumental-variable analysis conducted using data from four experimental studies of welfare reform found that increased income was associated with improved academic outcomes, although only for young children (under age 6). Studies of programs such as the Earned Income Tax Credit (EITC), the Supplemental Nutrition Assistance Program (SNAP), and Medicaid also supply causal evidence of the effects of poverty and income on outcomes and the positive impacts of mitigating poverty.

Similarly, syntheses of studies examining the effects of welfare reform initiatives on children’s outcomes have found that programs that increased family income were associated with improvements in children’s outcomes; by contrast, programs that increased employment without increasing income were not found to enhance outcomes. These findings suggest the value of social policies and programs that can reduce poverty and those that can reduce the effects of poverty.

Policies and Programs Can Reduce or Mitigate Child Poverty

As noted, children living in or near poverty tend to have poorer health, lower academic attainment, and a greater chance of being poor in adulthood, relative to their higher-income peers. Rigorously conducted research—both experimental and non-experimental—suggest that poverty itself is at the root of these differences because it affects most aspects of children’s lives, ranging from food to housing to family interactions to school quality and neighborhood stress. However, there is a strong and growing research base that supports the efficacy of a wide range of programs and policies for reducing child poverty, mitigating its effects on development, and promoting long-term economic mobility. Such policies can include not just government safety net programs, but also minimum wage legislation, labor market regulations, and regional economic development incentives; however, the research on the impact of these latter policies on child poverty rates is much more limited or findings are mixed (as in the case of minimum wages).

Much of the existing research on policy and program effectiveness has focused on the role of government programs in improving child and family economic well-being. Programs range from cash transfers and refundable tax credits, intended to directly supplement a family’s income, to in-kind transfers, which typically provide direct services or vouchers that families can use to meet specific needs (such as nutrition, housing, health care, or child care needs). Both types of programs not only provide stability in a family’s access to basic needs during economic downturns and unexpected hardships, but also support longer-term economic mobility by freeing up family resources that can be used to support parents’ labor market participation and improve their access to higher-wage jobs. Such programs also include child care, transportation, and educational and skills investments.

Taken together, government tax and transfer programs have powerful anti-poverty effects, reducing child poverty (as measured by the Supplement Poverty Measure) by 9.3 percentage points in 2019 and 15.0 percentage points in 2020—in combination with the additional federal relief efforts implemented during the COVID-19 pandemic. Above and beyond their impact on family economic well-being, many of these programs have been found to improve child outcomes. There is, for example, a robust research literature base highlighting the effects of increased family income (through expansions of the EITC) on improved child academic achievement, high school graduation rates, college attendance, and later employment and earnings. In addition, increases in family income from the EITC during pregnancy were associated with reduced incidence of low infant birthweights, which, in turn, is associated with more positive longer-term child health outcomes. SNAP participation has also been found to reduce the incidence of low infant birthweights, as well as poor health in early childhood and school absences in later childhood.

While the research evidence for the benefits of programs such as EITC and SNAP is robust, there is also a growing evidence base for a broader range of programs and services. Studies on the impact of Medicaid and the Children’s Health Insurance Program have found that these programs are linked to increases in preventative care and reductions in preventable hospitalizations among children. Children who received Medicaid coverage in early childhood were more likely to have higher academic achievement, higher educational attainment, and improved health as adults. Evidence on the effects of housing assistance is more mixed, but some evidence suggests that children who were young when their families received housing assistance (allowing them to move to low-poverty neighborhoods) had improved educational attainment and adult earnings. Early education supports for families with low incomes, such as Head Start, can also promote family economic mobility by supporting increased parent labor force participation and access to educational and skill-building opportunities. At the same time, intergenerational economic mobility is supported by improved educational attainment and young adult outcomes among children served by these programs.

Conclusion

Despite recent progress in reducing child poverty, there continue to be high numbers of contemporary children who are growing up in poverty. These children are more exposed to environmental toxins, crime, schools with inadequate resources, food insecurity, inadequate housing, and parental stress—that is, they are more at risk from contexts that lack the nutrients that children need to thrive academically, physically, socially, and emotionally. The loss to these children and their families from birth onward is not inevitable, as prevention and mitigation approaches can enhance their well-being and their contributions to the larger society. Changing their trajectories calls for effective solutions to stabilize families economically and ensure that children’s developmental needs are met during difficult times. Effective solutions will include structural changes to mitigate the effects of powerful economic upheavals, as well as long years of discrimination and socioeconomic inequity.

Historically, rates of child poverty in the United States have been considerably higher in other developed countries, suggesting that child poverty is not an insurmountable problem. Just as many sources of child poverty have their roots in social structures, our social policies and investments offer powerful solutions. Recognizing the importance of addressing systemic inequities in education, health care, employment opportunities, and other avenues toward economic well-being, effective solutions must encompass a range of strategies. These include strengthening investments in child care, K-12 and higher education, job training programs, and health care. Solutions should also include strengthening family and community supports, such as initiatives that foster collaboration between the systems with which children and families interact, the communities in which they live, local businesses, and community-serving nonprofit organizations.

This brief has also highlighted the strong evidence base on programs and policies that reduce child poverty and mitigate its influence on child development by ensuring that parents have the resources and emotional resilience for supportive and stimulating childrearing. Moreover, the COVID-19 pandemic shone a light not only on the problems associated with child poverty, but also on new policy solutions. For example, the American Rescue Plan’s expansion of the Child Tax Credit in 2021—in the wake of high levels of unemployment during the pandemic—was the most significant anti-poverty investment in decades, reducing poverty by 30.0 percent during the six months it was implemented. Additional analyses also found that the expanded Child Tax Credit did not negatively impact employment or labor force participation. Due to its expected impact on improved child health, educational attainment, and longer-term outcomes, one study has estimated that the American Rescue Plan’s expanded Child Tax Credit in 2021 will have generated approximately $800 billion in societal benefits (for example, from additional tax revenues from increased earning and reduced health care costs and lower expenditures for crime and child protection services). This represents a rate of return on investment of nearly eight to one. This example highlights the strong potential of public policy to ameliorate child poverty and the broad societal benefits to doing so.

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Acknowledgements

The authors would like to thank Martha Zaslow, Kristen Harper, and Lina Guzman for their thoughtful reviews and comments on earlier drafts of this brief. We would also like to thank Edwin Crockett and Dominique Martinez for their skilled research assistance and fact-checking support.