SOCIAL TRANSFERS, CHANGING FAMILY-STRUCTURE AND LOW-INCOME AMONG CHILDREN

Our aim in this paper is to resolve a paradox. Despite declining real earnings among young adults, there has been no secular rise in child p overty. We show that the relative stability in child poverty is a resu lt of two factors, First, the decline in market income in young famili es with children has been offset by rising transfers. Since the 1970s, social transfers have replaced earnings as the main source of income among low-income families with children. Second, changes in the fertil ity and labour market behaviour of young adults have sharply reduced t he risk of young children growing up in low-income households. Thus, t he upward pressure on low income among children stemming from the labo ur market has been offset by social transfers, changes in family forma tion, and the labour market behaviour of young adults. Whether these o ffsetting patterns will continue in the late 1990s remains to be seen.