The Income and Wealth of Households with Children 2004-2014

The financial situation of Norwegian households has improved over the last decade due to a strong rise in household income. Households with children have, however, experienced a slower income growth in this period compared to households without children. Among the families which lag behind, we find households with young children (0-5 years), single parents, large families and households where the adults have a weak attachment to the labour force. When the rise in income is not equally shared among the households, this leads to an increase in income inequality. Among households with children there was a rise in income inequality between 2004 and 2014 because households at the bottom end of the distribution had a much slower income growth compared to those households at the upper end of the distribution. While children in the 90th percentile of the income distribution had an equivalent household income that was 2.3 times higher than the household income of childrenin the 10th percentile in 2004, this ratio increased to 2.6 in 2014.

There has also been a substantial increase in the number of children in low-income households. In 2014, 9.4 per cent of all children 0-17 years lived in a household at persistent risk of low-income. This was up from 7.2 per cent in 2004.

During the last decade there has been a substantial shift in the demographic composition of low-income households. Children with an immigrant background increasingly constitute a larger proportion of those at persistent risk of poverty. In 2014 more than half (51 per cent) of all children in households at risk of persistent low-income had an immigrant background. However, there are huge differences in household income among children with an immigrant background, depending on their country of origin. In general, children with a background from the European Union, USA, Canada, Australia, New Zealand etc. have significantly higher household income and less risk of poverty, compared to children with an immigrant background from other parts of the world. Among those children most at risk of belonging to a low-income household we find those with an immigrant background from countries like Eritrea, Afghanistan, Iraq, Syria and Somalia.

The single most important wealth components of households with children is their dwelling (primary and secondary), which in 2014 alone made up more than 70 per cent of their total assets. However, even the amount of liabilities is substantial among household with children, and constitute 53 per cent of total assets in 2014. The size of net wealth varies between household types and by the age of the children. Single parents with children younger than 6 years of age stand out as a group where as many as 40 per cent have zero or negative net wealth, and where the median net wealth is close to zero. On the other hand, couples with children where the age of youngest child is 12-17 years, owns a substantial wealth, where the median net wealth was more than 1.9 million NOK in 2014.