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

Abstract

Young adults in the United States, especially young Black adults, experience high poverty rates relative to other age 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 investigates that mech-a nism alongside racial differences in childhood poverty exposure. Analyses of Panel Study of Income Dynamics data reveal that racial differences in childhood poverty are more consequential than differential attainment of education, employment, and family formation benchmarks in shaping racial differences in young adult poverty. Whereas benchmark attainment reduces an individual’s likelihood of poverty, racial differences in benchmark attainment do not meaningfully explain Black–White poverty gaps for three reasons. First, childhood poverty is negatively associated with benchmark attain-ment, generating strong selection effects into the behavioral characteristics associated with lower pov erty. Second, bench mark attainment does not equal ize poverty rates among Black and White men. Third, Black children experience four times the poverty rate of White children, and childhood poverty has lingering negative consequences for young adult pov erty. Although equal iz ing bench mark attain ment would reduce Black–White gaps in young adult poverty, equal iz ing child hood pov erty expo sure would have twice the reduction effect.