Economics and Family Size

Many economists have tried to distinguish the behaviors that help create wealth from the ones that create poverty. However, almost all of them have been looking at a fixed paradigm. This means that they consider values like thrift, hard work and entrepreneurship to be the defining factors for success. An underlying assumption of this analysis is that all individuals had an equal opportunity to grow and develop themselves.

Adam Vass Gal has challenged this assumption in his new book “Generational Poverty: A Look At the Culture of the Poor”. According to Vass Gal, hard work cannot be discounted as being the single most important factor for defining success. However, there are other factors at play. These other factors are largely dependent on the family that individuals are born in. Since the type of family does not change for several generations, poverty and wealth both run in cycles! The rich remain rich for several generations whereas the poor remain poor for several generations.

In this article, we will understand how family size can have an impact on the economic well-being of an individual, a group of individuals or society in general.

Single Parenthood

Vass Gal studied the economic hardships associated with the poor. One of the most glaring challenges that were faced by them was the issue of single parenthood. Single parenthood is an extremely common occurrence in poor neighborhoods whereas it is not so common in upscale neighborhoods. This is the case with both rural as well as urban America.

The issue is more glaring because of high costs and low incomes associated with it. Most people that are single parents are in their teens or early adulthood. As a result, they have not acquired significant educational qualifications or jobs skills which would enable them to earn higher wages. They typically work low-end jobs at fast food restaurants or retail chains. These jobs involve a lot of physical labor and very less skill. As a result, they are paid less.

On an average, the cost of child rearing comes to about $230000 whereas the income of a single parent is less than $30,000 per year. These figures have been reported by the Department of Agriculture in the United States. The financial burden falls both on the female and the male. While females are more exposed to these issues, males also have to fork out a significant sum in the form of alimony. In either case, single parenthood has an adverse impact across generations.

Single parents are not able to take care of themselves in this generation since they have to shell out money to raise children. Also, since the children are not raised in a conventional manner, there are high odds that they might take to a life of crime, addiction or such anti-social behaviors.

To sum it, the average single parent begins a cycle of poverty that might propagate itself across generations. This may not be strictly true, though. There have been cases like Steve Jobs, who was the son of a single parent and yet has created the most valuable corporation in the world.

No Children

Vass Gal pointed out that the most affluent class is where both spouses are working and do not have any children. This has a myriad number of reasons. Firstly, two incomes are coming in the door. This means twice the amount of money if both spouses are working is highly skilled jobs.

Also, houses with no children have very few household chores. As a result, the time and money spent on these chores are minimum allowing people to advance in their careers. The favorability of this demographic is what is prompting women to get married and reproduce at a later age. This arrangement may be favorable from an economic point of view. However, there are certain disadvantages.

Firstly, earning money should not be the sole reason for life.

Secondly, kids born to older mothers may have medical complications which may nullify any advantage gained monetarily.

This demographic is favorably poised for affluence. The challenge here is to make choices that would allow a balance between personal and work life.

One Child Policy

China had famously implemented a one child policy. This is because they realized the correlation between family size and affluence. However, the decision made was wrong.

One child per couple would mean that every person in the next generation would have to support two people who are not working. This is the demographic time bomb that China is facing. This policy had to be ultimately repealed to ensure that resources are not spent on taking care of old people.

If each young worker has to support two elderly people, they are pretty much destined to be poor all their lives. China and other nations of the world need to balance their policies. The children must be few enough to be educated and skilled correctly and plenty enough to take care of the previous generation in their old age.

To sum it up, research does point out that family background has a greater say in the economic position of an individual than any other factor. Economic policy must, therefore, be geared towards creating favorable incentives for people to adhere to these family guidelines.

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