Income mobility and financial disadvantage: Australian children

This article provides the first Australian estimates of income mobility transitions among Australian children over a three year period. The results suggest that there is considerable income mobility but that, in the vast majority of cases, the shift is not dramatic. Transitions from the top to the bottom of the income spectrum, and vice versa, are very rare. Using a financial disadvantage line set at the cut-off point for the bottom quintile, the study also showed that about twelve per cent of all Australian children were in persistent financial disadvantage, experiencing financial disadvantage in all of the three years. An estimated 28 per cent of Australian children experienced financial disadvantage in at least one of the three years — about 40 per cent more than the proportion experiencing financial disadvantage in annual ‘snapshots’. Comparison with overseas studies suggests that Australia does not appear to have greater mobility, perhaps contrary to the Australian perception of the ‘fair go’. Analysis of the factors precipitating transitions into and out of financial disadvantage suggests that the emphasis by the Federal Government on requiring welfare recipients to work is an appropriate policy response, which may help to reduce the proportion of children who remain disadvantaged for extended periods of time.