The first 1,000 days of life (conception to 2 years) represent a critical developmental period when the brain develops more rapidly than at any other time. During this period, household income is a protective factor that contributes to children’s optimal health and development. In contrast, low household income and poverty can compromise brain growth, and increase the risk of poorer socioemotional functioning, school failure, chronic disease, mental illness, reduced economic opportunity, and intergenerational adversity. A paradox of the first 1,000 days is that, during this period, when money arguably matters most, becoming a parent is associated with substantial drops in household income. Researchers seeking to understand the drivers of this “income penalty” commonly study parent gender and partner status, as well as sociodemographic factors such as pre-birth education and employment. While the income penalty is important in and of itself, there is limited research examining how it relates to poverty risk.
The birth of a first child results in a reduction in household gross income, with one-parent households experiencing, on average, a 27% decrease and two-parent households an 18% decrease. Within five years of the first child’s birth, a substantial portion of households (37-40%) either remain in poverty or enter poverty. This is more common for one-parent (63-70%) than two-parent households (34-36%), with childbirth amplifying the likelihood of being in poverty by 0.17 and 0.10 percentage points, respectively. Furthermore, without government family payments, the average poverty rate increases from 26% for one-parent households and 10% for two-parent households before childbirth, to 63% and 20%, respectively, in the years following. With family payments, the average poverty rates after childbirth are 37% and 11%, respectively.
While family payments help reduce poverty among households around childbirth, these payments do not protect them from falling into poverty after childbirth. This demonstrates the potential of the Australian government’s family payment system to further ameliorate child poverty. However, actions to reduce or eradicate child poverty will be more complex than increasing household income alone.