Born To Be Destitute: Capital Transfer and Intergenerational Transfer of Poverty

Augus Surachman,
Professor Hartoyo*,
Bogor Agricultural University, Indonesia

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Abstract: This research was conducted to analyze the intergenerational transfer of poverty in two-generation families and to examine the mechanism of the transfer by utilizing intergenerational capital transfer model, especially human capital and material capital. This research revealed that parental investment behavior on children was the determining factor in the second-generation family’s welfare. The research estimated the chance of second-generation family with father coming from poor family was 38 times higher to be poor than second-generation family with father coming from not poor origin family. Status mobility from poor to not poor could be due to education (for man) and marital factor (for woman).

Introduction: Poverty is arguably the hardest social economic problem to be solved in this century (Wagle, 2008). About 320-433 million people in the world are suffering chronic poverty (CPRC, 2008), a long-term deprivation even for their lifetime and sometimes that condition is transferred to the next generation (Moore 2005). Research has shown that the possibility of children becoming poor in the future was 35 percent higher when the children were born and raised in chronic poor families (Pakpahan, Suryadarma, & Suryahadi, 2009).

However, our knowledge about the process of that intergenerational poverty transfer is still limited. Moore (2005) constructed an intergenerational transfer of poverty model that shows the cause as the lack or the absence of capital transfer, especially human capital and material capital. Transfer of human capital, especially performed by family through parental investment in children is defined as every effort, activity, and family resource allocation to increase the quality of life for the child (Hartoyo, 1998). Bequest is the main media of material capital through generations, besides dowry and wealth accumulation after marriage (Moore, 2001).

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