Household income and the risk of poverty around the time of childbirth

The study examines the impact of childbirth on household income and poverty during the crucial first 1,000 days of a child's life, using longitudinal data from the Household, Income, and Labour Dynamics in Australia Survey (2001-2021) and an event study approach. 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. This indicates that while government payments assist in mitigating poverty, they do not fully shield families from the risk of falling into poverty after childbirth.