Poverty in adulthood: personal and context factors. Evidence from some European countries

Living in poverty may have long-run negative effects. Children from poor families are more likely to be poor when adults. The interaction between families and public policies is crucial as it affects a child's opportunities. In this paper we focus on European countries and analyze why individuals from different countries and cohorts differ in the poverty status once we control for personal and family characteristics. We first isolate the impact of country-cohorts from regressions using individual-level data and then explain this residual country-cohort heterogeneity in poverty incidence with aggregate level indicators of social policies. We consider three different measures of social policies: a welfare state generosity index and two childhood-related policy: family allowances and expenditure in primary education. We find that these social policies' measures reduce poverty incidence in adulthood beyond personal and family characteristics. We find that individuals from country-cohorts with more generous welfare states, higher family allowances and expenditure in primary education show lower poverty incidence. In addition we find that they are more effective when initial GDP is low.