THE ISSUE presented (the effect of child poverty on economic growth) is a mis-placed of variable between dependent (Y) and independent variable (X). Child poverty resulted from economic inequality or intrinsic social structure that creates such poverty. The poverty itself is not direct, but a direct effect of the parent's or family poverty- - - which in turn resulted from income inequality or other social factors that contributes to poverty. Therefore, to use child poverty as the independent variable that leads to the reduction of economic output (Y) may not be a correct way to study the issue.

THE GDP equation says that Y = C + G + I + T. Where would child poverty be placed? According to the question, the focus is on G (government spending). The way that government spending is accounted for purposes of economic growth or changes in the GDP is not correct to assume that every expense by the government contributes to commercial activities or that non-commercial spending is a waste. Government expenditure for social causes, or for fighting poverty itself is considered social investment. For instance, if child poverty comes from the lack of education of parents; if the government spends money on education and training- - - this expenditure is a social investment. When the government spends money to solve problem, it may also be classified as a social investment, which society will reap benefits in the future; growth is expected to follow.

CHILD POVERTY DOES NOT DIVERT RESOURCES because if resources had been spent n the issue, child poverty would not exists. If child poverty exists, it is because the state did not do enough to reduce or eliminate it. If the government spends money to fight it, it stands to gain. As such, the expenditure is an investment, not waste. One dollar spent to life a child out of poverty and help made her/him to become a productive member of the work force is a benefit to all. The social ROI is far beyond the original investment.

My main interest is to inquire if child poverty rededuces future economics growth because it reduces the productivity of the person who grows up poor. We know for instance that poor children have much lower earnings when adults. The possible contemporaneous effect of child poverty on economic growth could also be there but less of a concern to me.

Thanks for your answer.

Are you sure there is effect?