RICH kids do better at school and poor children struggle due to genetic ``inherited abilities'', the Federal Government's top policy research agency says.

In a controversial new report released today, the Productivity Commission cites ``parents' cognitive abilities and inherited genes'' as one of five main reasons why kids from low-income families lag behind those from wealthy homes.

Genes are listed before access to books and computers, parental attention and aspirations, and even schools.

In a section entitled ``inherited abilities'', the 246-page staff working paper states that ``one explanation for differences in educational attainment between children of low and high socio-economic backgrounds is parents' cognitive abilities and inherited genes''.

Citing a British study, it suggests that ``inherited cognitive abilities'' explain one-fifth of the gap in test scores between children from the richest and poorest families, once environmental factors are taken into account.

``Genetic explanations for children's success at school is a controversial and complex area because of interactions between genes and the environment,'' the report says.

``Evidence is now emerging that the same genetic endowment can result in different outcomes depending on the environment''.

The Productivity Commission notes that Australia has one of the highest rates of joblessness among families in the developed world, with nearly one in five families unemployed.

It cites two research studies showing that unemployed parents have "poorer parenting skills'', with their children 13.4 per cent more likely to lie or fight, and 7.6 per cent more likely to be bullied.

The Productivity Commission also links learning success to ``character traits such as perseverance, motivation and self-esteem''.

The report on ``Deep and Persistent Disadvantage in Australia'', made public today, says poor children are ``behind the eight-ball'' when they start school and the gap widens as they grow older.

Poorer children may have less access to books, computers or study space than kids from well-off families, it says.

And parents' aspirations and attitudes to education "vary strongly with socio-economic position''.

Better educated parents tend to spend more time reading to children and helping with homework, the report says.

"Evidence on why some disadvantaged children 'buck the trend' to succeed in later life suggests that the level of parental interest and parents' behaviour are important,'' it says.

"Attending school with higher-achieving or more advantaged peers seemed to be associated with a higher probability of bucking the trend.

"While inherited genes influence their development, the quality of family environments, and the availability of appropriate experiences at various stages of development, are crucial for building capabilities.''

The Productivity Commission cites the Organisation for Economic Cooperation and Development's (OECD) international PISA tests of 15-year-olds in reading, maths and science.

"Results from the PISA show that economically advantaged parents are more likely to have read to their children regularly, sung songs, talked about what they had done during the day, and read signs aloud to their children,'' the report says.