Breaking the cycle of dependency

| October 25, 2021

Despite strong economic growth and a targeted income support system, inequality in Australia has crept up over the past three decades. This is a societal problem in itself, but it gets compounded by the fact that disadvantage is also passed down across generations.

Together, these two problems pull the top and bottom rungs of the socioeconomic ladder further apart, making it harder for poor children to avoid becoming poor adults.

Inequality and disadvantage make it difficult for poor children to avoid becoming poor adults. 

A lot of the responsibility falls on the income support system to ensure families at the bottom don’t fall behind and that their children have equal opportunities as they grow up. However, the income support system in Australia doesn’t go far enough to completely close the gap.

This is especially true today, with income support systems stretched thin as they support financially vulnerable families impacted by the COVID-19 pandemic.

As we move into a period of recovery, understanding how this vulnerability persists across generations is an essential first step for designing policies to break the cycle of disadvantage and set children up for a better future.

As our research has found, children in families that receive income support, are almost twice as likely to rely on income support themselves as young adults, compared to those who have had no exposure to income support.

Our findings point to two key factors that limit young adults’ life chances: parental disability (despite Australia’s universal health care system) and growing up in a poor single-parent household.

Importantly, both types of disadvantage have broad-reaching consequences. It isn’t simply that unemployment begets unemployment or that disability begets disability.

The children of families on income support are more likely to rely on income support themselves as adults. 

Disability, for example, is particularly harmful since it has impacts on child employment, health and family outcomes.

Without adequate support, living with a disability may impact parents’ ability to provide a stimulating and nurturing environment for their children.

Our findings also suggest that children often end up caring for their own parents with disabilities, limiting their job opportunities and career progression as young adults.

Vulnerable single parents, on the other hand, bear the weight of responsibility when raising children alone, which can be difficult to manage while also providing for their families. Without adequate support, they may find it hard to make time for their children, pay attention to their progress in school or respond to their developmental needs.

The COVID-19 pandemic has disproportionally disadvantaged single parents, exacerbating these difficulties even further with the closure of childcare and schools.

This persistence in income support dependency across generations in Australia doesn’t appear to be the result of a widespread welfare culture – that is, the welfare system isn’t acting as a disincentive to work.

The welfare system isn’t encouraging dependency, but recipients lack the resources to create opportunity for their children. 

For example, we find that parents with longer spells of income support aren’t much more likely to have children who end up on income support themselves – even short exposures to income support by parents predict more income support dependency for children.

This isn’t what we would expect from a system with an entrenched welfare culture, where long spells of welfare are linked to families where parents and children share strong disincentives to work. A large-scale redesign of the social security system to further incentivise work isn’t therefore the right solution for Australia.

Instead, we need more targeted support for parents living with a disability and for single parents to ensure their children are afforded equal opportunities in life.

This support could come through higher support payments or through access to additional services to support the family, like parenting information or coaching.

Expanding the focus of income support for single parents and people with a disability so that it also supports their families will be a step towards breaking the cycle of intergenerational disadvantage and spreading opportunity for all our children.

This article was written by Dr Sarah Dahmann and Dr Nicolás Salamanca of the University of Melbourne.  It was published by Pursuit.