Published: February 24, 2020

The primary mechanism linking welfare receipt across generations in Australia is a failure to complete high school. In order to disrupt this, schools, communities and governments must find better ways to support the education of children in welfare-reliant families.

These are key findings from a Life Course Centre Working Paper that provides an in-depth investigation into the pathways linking intergenerational welfare receipt in Australia. The analysis not only calculates the intergenerational correlation in welfare, but also quantifies the portion of that correlation that operates through key mechanisms – namely, a failure to complete high school, and risk-taking behaviour.

The Working Paper is authored by Melisa Bubonya, a Research Economist at the Productivity Commission, and Professor Deborah Cobb-Clark, a Life Course Centre Chief Investigator at The University of Sydney School of Economics. They analyse data from administrative welfare records for young Australians aged 23 to 26 and their parents over nearly two decades, which are also linked to survey responses from young people at age 18.

Together, the two key pathways in the study jointly account for nearly a third (32.2 per cent) of the intergenerational correlation in welfare, and more than half (52.6 per cent) of the link between parental welfare and young people’s total welfare benefits.

The study finds that the main mechanism that links welfare receipt across generations is a failure to complete high school. Young Australians in welfare-reliant families experience more disruptions in their schooling through school changes, residential mobility, school expulsions and suspensions. They also receive less financial support from their families. Both of these negatively affect their chances of completing high school and avoiding welfare.

Young Australians’ risk-taking behaviour – such as smoking, illicit drug use, delinquency and pregnancy – is another key pathway in intergenerational welfare transmission. In contrast, physical and mental health, academic achievement, and work-welfare attitudes play a more modest role.

The paper concludes that a lack of strong evidence that work-welfare attitudes drive the intergenerational correlation in welfare receipt is at odds with cultural explanations that attribute welfare dependency to the values that children acquire from their parents. The importance of parental financial support also calls into question the wisdom of policies that increasingly shift the financial burden of supporting young people from the public purse to their families.

You can read the full Working Paper, ‘Pathways of Disadvantage: Unpacking the Intergenerational Correlation in Welfare’, here.