Movements between employment and child poverty

This study uses longitudinal data from the Families and Children Study to explore the impact of movements in and out of paid employment on the economic circumstances of families with children. It also looks at the circumstances of families that receive in-work tax credits to investigate how their economic circumstances change following employment transitions.

Key points:
- 53% of lone parent families and 94% of couple families had at least one parent who worked for 16 or more hours per week. 5% lone parents worked for less than 16 hours per week. Couple families were more likely to be dual earners than sole earners. In sole-earner couple families the father was more likely to be in work than the mother. Only 5% couple families had neither parent in work for any hours per week.
- 65% of working lone parent families were in receipt of Working Tax Credit (WTC). One quarter of single-earner couple families and one in ten dual-earner couple families were receiving WTC. On average lone parent families received £101 in tax credits (£58 WTC and £43 Child Tax Credit (CTC)). Sole-earning couple families received a similar amount to lone parent families (£56 WTC and £42 CTC), and dual-earning couple families received a lower amount (£30 WTC and £35 CTC).
- In 2005 18% families with children were living in income poverty.
- Family work status has a clear relationship with income poverty. More than half of families that did not have a parent who worked for at least 16 hours per week were in income poverty. There were very few dual-earning couple families in income poverty. However, having just one parent who works for 16 or more hours per week does not guarantee that the family will avoid income poverty. 13% working lone parent families were in income poverty, as were 15% of couple families where just one parent worked for 16 or more hours per week.
- Following a transition into work, a substantial proportion (70%) of families had moved out of income poverty a year later, and this figure was the same for lone parent and couple families. Lone-parent families who received in-work tax credits had higher income poverty exit rates after one year than couple families who received them (75% 62% respectively exited poverty). Rates of income poverty exit improved further for families that remained in work for a further year – 77% of lone parent families and 78% of couple families had escaped income poverty two years after finding and remaining in work.
- Movements in and out of work were the key factors associated with changes in income poverty and hardship status over time. Other factors were also associated with these changes, including family size, ethnicity, and tenure.