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The cycle of poverty has been defined as a phenomenon where poor families become impoverished for at least three generations, i.e., for enough time that the family includes no surviving ancestors who possess and can transmit the intellectual, social, and cultural capital necessary to stay out of or change their impoverished condition. In calculations of expected generation length and ancestor lifespan, the lower median age of parents in these families is offset by the shorter lifespans in many of these groups.
Such families have either limited or no resources. There are many disadvantages that collectively work in a circular process making it virtually impossible for individuals to break the cycle. This occurs when poor people do not have the resources necessary to get out of poverty, such as financial capital, education, or connections. In other words, impoverished individuals do not have access to economic and social resources as a result of their poverty. This lack may increase their poverty. This could mean that the poor remain poor throughout their lives. This cycle has also been referred to as a "pattern" of behaviors and situations which cannot easily be changed.
The poverty cycle can be called the "development trap" when it is applied to countries.
Ruby K. Payne, author of A Framework for Understanding Poverty, distinguishes between situational poverty, which can generally be traced to a specific incident within the lifetimes of the person or family members in poverty, and generational poverty, which is a cycle that passes from generation to generation, and goes on to argue that generational poverty has its own distinct culture and belief patterns.
The followings are causes of poverty:
- Low productivity rates
- Low salary
- Low infrastructure and corrupt governance
- Business failure
- Ignorance, lack of skills and technology
- Unhealthiness or diseases
- Inability to access to resources such as land, finance, information, technical assistances, etc.
- No on-going education
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A 2002 research paper titled "The Changing Effect of Family Background on the Incomes of American Adults" analyzed changes in the determinants of family income between 1961 and 1999, focusing on the effect of parental education, occupational rank, income, marital status, family size, region of residence, race, and ethnicity. The paper (1) outlines a simple framework for thinking about how family background affects children’s family and income, (2) summarizes previous research on trends in intergenerational inheritance in the United States, (3) describes the data used as a basis for the research which it describes, (4) discusses trends in inequality among parents, (5) describes how the effects of parental inequality changed between 1961 and 1999, (6) contrasts effects at the top and bottom of the distribution, and (7) discusses whether intergenerational correlations of zero would be desirable. The paper concludes by posing the question of whether reducing the intergenerational correlation is an efficient strategy for reducing poverty or inequality.
Because improving the skills of disadvantaged children seems relatively easy, it is an attractive strategy. However, judging by American experience since the 1960s, improving the skills of disadvantaged children has proved difficult. As a result, the paper suggests, there are probably cheaper and easier ways to reduce poverty and inequality, such as supplementing the wages of the poor or changing immigration policy so that it drives down the relative wages of skilled rather than unskilled workers. These alternative strategies would not reduce intergenerational correlations, but they would reduce the economic gap between children who started life with all the disadvantages instead of all the advantages.
Another paper, titled Do poor children become poor adults?, which was originally presented at a 2004 symposium on the future of children from disadvantaged families in France, and was later included in a 2006 collection of papers related to the theme of the dynamics of inequality and poverty, discusses generational income mobility in North America and Europe. The paper opens by observing that in the United States almost one half of children born to low income parents become low income adults, four in ten in the United Kingdom, and one-third in Canada. The paper goes on to observe that rich children also tend to become rich adults—four in ten in the U.S. and the U.K., and as many as one-third in Canada. The paper argues, however, that money is not the only or even the most important factor influencing intergenerational income mobility. The rewards to higher skilled and/or higher educated individuals in the labor market and the opportunities for children to obtain the required skills and credentials are two important factors.[clarification needed] Reaching the conclusion that income transfers to lower income individuals may be important to children in the here and now, but they should not be counted on to strongly promote generational mobility. The paper recommends that governments focus on investments in children to ensure that they have the skills and opportunities to succeed in the labor market, and observes that though this has historically meant promoting access to higher and higher levels of education, it is becoming increasingly important that attention be paid to preschool and early childhood education.
Sociologist William Julius Wilson has said that the economic restructuring of changes from manufacturing to a service-based economy has led to a high percentage of joblessness in the inner-cities and with it a loss of skills and inability to find jobs. This "mismatch" of skills to jobs available is said to be the main driver of poverty.
Research shows that schools with students that perform lower than the norm are also those hiring least-qualified teachers as a result of new teachers generally working in the area that they grew up in. This leads to certain schools not producing many students that go on to college. Students from these schools that go on to be college graduates are not as skilled as they would be if they had gone to a school with higher-qualified instructors. This leads to education perpetuating a cycle of poverty. The individuals that choose to work in the schools close to them does not adequately supply the school with enough teachers. The schools must then outsource their teachers from other areas. Susanna Loeb from the School of Education at Stanford did a study and found that teachers who are brought in from the suburbs are 10 times more likely to transfer out of the school after their initial year. The fact that the teachers from the suburbs leave appears to be an influential factor for schools hiring more teachers from that area. The lack of adequate education for children is part of what allows for the cycle of poverty to continue.
Another theory for the perpetual cycle of poverty is that poor people have their own culture with a different set of values and beliefs which keep them trapped within that cycle generation to generation. This theory has been explored by Ruby K. Payne in her book A Framework for Understanding Poverty. In this book she explains how there is a class system in the United States where there is a wealthy upper class, a middle class, and the working poor class. These classes each have their own set of rules and values which differ from each other. In order to understand the culture of poverty and how the poor class’s set of rules tend to keep them trapped in this continual cycle Payne describes these rules and how they affect the poor class. Time is something that is treated differently by the poor; they generally do not plan ahead but simply live in the moment which keeps them from saving money which will help their children escape poverty. Payne expresses how important it is when working with the poor to understand their unique cultural differences so that one does not get frustrated but instead tries to work with them on their ideologies and help them to understand how they can help themselves and their children escape the cycle. One aspect of generational poverty is a learned helplessness that is passed from parents to children and on down the line. This learned helplessness can be explained as the ideology that there is no way for one to get out of poverty and so in order to make the best of their situation one must live in the moment and experience what they can when they can. This leads to people spending money right as they get it, often on unnecessary goods such as alcohol and cigarettes, thus teaching their children to do the same which also creates a trap for children keeping them and their children in poverty. Another important point Payne makes is that leaving poverty is not as simple as acquiring a lot of money and moving up but also includes giving up relationships in exchange for achievement. This helps to explain why the culture of poverty tends to keep families in poverty from generation to generation as this is the culture they know and the relationships they have are all within that class. 
The "culture of poverty" theory has been debated and critiqued by many people including Eleanor Burke Leacock (and others) in her book The Culture of Poverty: A Critique. Leacock claims that people who use the term, "culture of poverty" only "contribute to the distorted characterizations of the poor." Aligning with Leacock's beliefs on the subject, Michael Hannan in an essay  argues that the "culture of poverty" is "essentially untestable." This is due to many things including the highly subjective nature of poverty and issues concerning the universal act of classifying only some impoverished people as trapped in the culture.
2004 research in New Zealand  produced a report that showed that "life shocks" can be endured only to a limited extent, after which people are much more likely to be tipped into hardship. The researchers found very little differences in living standards for people who have endured up to 7 negative events in their lifetime. People who had 8 or more life shocks were dramatically more likely to live in poverty than those who had 0 to 7 life shocks. A few of the life shocks studied were:
The study focused on just a few possible life shocks, but many others are likely as traumatic or more so. Chronic PTSD, complex PTSD, and depression sufferers could have innumerable causes for their mental illness, including those studied above. The study is subject to some criticism
History in the United States has shown that Americans saw education as the way to end the perpetual cycle of poverty. In the present, children from low to middle income households are at a disadvantage. They are twice as likely to be held back and more likely not to graduate from high school. Recent studies have shown that the cause for the disparity among academic achievement results from the school’s structure where some students succeed from an added advantage and others fail as a result of lacking that advantage. Educational institutions with a learning disparity are causing education to be a sustaining factor for the cycle of poverty. One prominent example of this type of school structures is tracking, which is predominantly used to help organize a classroom so the variability of academic ability in classes is decreased. Students are tracked based on their ability level, generally based on a standardized test after which they are given different course requirements. Some people[who?] believe that tracking "enhances academic achievement and improves the self-concept of students by permitting them to progress at their own pace." 
The negative side is that studies have shown that tracking decreases students' opportunity to learn. Tracking also has a disproportionate number of Latinos and African Americans that have low socioeconomic status in the lower learning tracks. Tracking separates social classes putting the poor and minority children in lower tracks where they receive second-rate education, and the students that are better off are placed in upper tracks where they have many opportunities for success. Studies have found that in addition to the higher tracks having more extensive curriculum, there is also a disparity among the teachers and instructional resources provided. There appears to be a race/class bias which results in intelligent children not receiving the skills or opportunities needed for success or social/economic mobility, thus continuing the cycle of poverty. There is an overall perception that American education is failing and research has done nothing to counter this statement, but instead has revealed the reality and severity of the issue of the existence of tracking and other structures that cause the cycle of poverty to continue.
While many governmental officials are still trying to find an answer to poverty, many states and localities are making an effort to break the cycle. Mayor Bloomberg of New York City has been advocating a plan where parents are paid up to $5000 a year for meeting certain goals that will better their lives. This policy was modeled after a Mexican initiative that aims to help poor families make better decisions that will help them in the long-term and break cycle of poverty and dependence that have been known to last for generations. In addition, many states also have been making an attempt to help break the cycle. For example, a bill has been proposed in the California Assembly that “would establish an advisory Childhood Poverty Council to develop a plan to reduce child poverty in the state by half by 2017 and eliminate it by 2027”. Even when the plan has poverty reduction as the goal, a rise in child poverty might be the reality for many states as it was in Connecticut. States are attempting to not only decrease the number of people in the cycle of poverty, but to also adjust the stringent work requirements that resulted from Congress’s welfare reform. The tougher work restrictions have upset many poverty advocates that believe the new regulations prevent individuals that are vulnerable or that lack skills from preparing for work. California Democratic Representative McDermott believes as a result of this and other effects of the new limitations, it has been harder for individuals to escape a life of poverty.
In his book Children in Jeopardy: Can We Break the Cycle, Irving B. Harris discusses ways in which children can be helped to begin breaking the cycle of poverty. He stresses the importance of starting early and teaching children the importance of education from a very young age as well as making sure these children get the same educational opportunities as students who are richer. Family values such as nurturing children and encouraging them to do well in school need to be promoted as well as a non-authoritarian approach to parenting. Harris also discusses the importance of discouraging teenage pregnancy and finding ways in which to decrease this phenomenon so that when children are born they are planned and wanted and thus have a better chance at breaking the cycle of poverty.
It has been suggested by researchers like Lane Kenworthy that increasing welfare benefits and extending them to non-working families can help reduce poverty as other nations that have done so have had better results.
The Harlem Children's Zone is working to end generational poverty within a 100-block section of Harlem using an approach that provides educational support and services for children and their families from birth through college. This approach has been recognized as a model by the Obama administration's anti-poverty program.
Children are most at the mercy of the cycle of poverty. Because a child is dependent on his or her guardian(s), if a child's guardian is in poverty, then they will be also. It is almost impossible for a child to pull him or herself out of the cycle due to age, lack of experience, lack of a job, etc. Because children are at such a young and impressionable age, the scars they gain from experiencing poverty early in life inevitably carry on into their adult life. "Childhood lays the foundations for adult abilities, interests, and motivation."  Therefore, if they learn certain poverty-related behaviors in childhood, the behaviors are more likely to perpetuate.
Studies have shown that household structure sometimes has a connection to childhood poverty. Most studies on the subject also show that the children that are in poverty tend to come from single-parent households (most often matriarchal). In 1997, nearly 8.5 million (57%) poor children in the US came from single-parent households. With the rate of divorce increasing and the number of children born out of wedlock increasing, the number of children that are born into or fall into single-parent households is also increasing. However, this does not mean that the child/children will be impoverished because of it.
According to Ashworth, Hill, & Walker (2004), both urban and rural poor children are more likely to be isolated from the nonpoor in schools, neighborhoods, and their communities. Human nature is to have relationships with others but when a child is isolated due to their socioeconomic status, it's hard to overcome that when the status doesn't improve. Therefore, poor children also have more tense relationships which sometimes results in abnormal behavior, acting out, or other unexplained behaviors.
There have been programs developed to specifically address the needs of poor children. Francis Marion University’s Center of Excellence to Prepare Teachers of Children of Poverty has a number of initiatives devoted to equipping teachers to be more effective in raising the achievement of children of poverty. Located in South Carolina, the Center provides direct teacher training as well as facilitates research in the area of poverty and scholastic achievement.
Oftentimes the communities in which impoverished children grow up in are crime ridden areas, examples of these areas are Harlem and the Bronx. These areas have effects on children as they are often exposed to crime and maltreatment at a young age, which is proven to reduce a child's ability to learn by up to 5%  Oftentimes these youth get caught up in the crime that goes on all around them, this involvement only worsens the effects of the cycle as they are often incarcerated or killed in many types of gang violence.
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