The Inequality of Poverty: How Places, Parents, and Poverty Affect the Gender Gap

Today in America, your past—where you lived, how much your parents earned, whether they were married—increasingly determines the economic opportunities of your future. New evidence suggests that growing up in places of high poverty with only one parent diminishes employment prospects for boys more than for girls. This is a striking reversal of the traditional gender gap, in which men have higher employment rates than women.

Recent research from the Equality of Opportunity Project, directed by economists Raj Chetty of Stanford and Nathaniel Hendren of Harvard, provides substantial evidence that the environment in which children grow up affects the later-life economic outcomes of men and women differently. Chetty and Hendren conducted their research by analyzing the IRS tax data, excluding identity information for privacy protection, of approximately 10 million children born in the early 1980s.

The researchers find that gender gaps in education, employment, and earnings differ with parental income levels and marital status. For example, the evidence demonstrates that men from middle- and upper-income families are more likely to work than women, while the opposite is true for boys from low-income families. In other words, women from low-income families are more likely to be employed than men.

In particular, boys from financially disadvantaged, single-parent households are less likely to work than girls, a reversal of the typical gender gap. In fact, this reversal of the gender gap for low-income families only occurs among children with unmarried parents. This result is consistent with emerging evidence that growing up with a single parent is especially harmful for boys’ outcomes during childhood.

Chetty and Hendren also note a stronger association for boys between a parent’s income and the child’s chances of attending college and obtaining future earnings. Low-income families are less likely to send students to college, with a disproportionate impact on boys. However, it is important to note that women from every income level make less than men on average, even though women attend college at higher rates.

Another finding is that places matter: Where children grow up affects their economic outcomes in adulthood. The study shows that the gender gap varies across geographic areas, and reflects the previously reported causal effects of improving neighborhood conditions for low-income families on their children’s future economic outcomes.

For example, in Chicago, children from low-income families earn 11 percent, or $2,886 per year, less than the average worker at age 26. However, there is a significant gender gap between men and women: Boys from low-income families earn 14 percent less, while girls earn about eight percent less, which is a difference of $1,638 per year.

Meanwhile, only 400 miles away in Minneapolis, children from low-income families earn almost 10 percent more, or $2,522 per year, than the average worker at age 26. The gender gap in Minneapolis is also less than one percent, an additional $234 more per year for women. This inequality between cities does not reflect differences in policy; rather, it shows the effects of poverty in different places based on a variety of attributes. These large disparities in the gender gap for children who grow up in low-income families in Chicago and Minneapolis are representative of the differences across communities in America.

Geographical differences in the gender gap are closely tied to greater racial, housing, and income segregation. The data demonstrate that boys from low-income families have lower employment than girls in communities with a larger percentage of black residents, greater housing and income segregation (measured by the Theil index), and more single-parent households. The analysis produces robust evidence that boys who grow up in places with high levels of poverty and segregation have much lower employment rates than girls who grow up in the same places.

Chetty and Hendren conclude that gender gaps experienced during adulthood are largely generated during childhood, conceivably because being raised in impoverished areas is acutely detrimental to boys. Determining why boys are more at risk than girls, as well as relevant policy interventions, is a critical area for future research.

Article Source: Chetty, Raj, Nathaniel Hendren, Frina Lin, Jeremy Majerovitz, and Benjamin Scuderi. “Childhood Environment and Gender Gaps in Adulthood,” NBER Working Paper, No. 21936 (2016).

Featured Photo: cc/(Nikolay Mamluke, photo ID: 8875496, from iStock by Getty Images)