The number of children living in the context of relative poverty in western industrialized countries is increasing, while at the same time a little amount of research is conducted about the impact of relative poverty on the child’s participation and development; focused on the socio-emotional development. This systematic literature review therefore investigates the impact of environmental factors, focused mainly on structural factors, in poverty settings in western industrialized countries on children´s peer relations. The focus will be laid on children´s participation in peer relations in school activities. Current literature published from 2012 or more recent was searched and results found were linked to theories. The findings of the articles covered several environmental aspects regarding the impact of poverty on the child and its peer relations. The results, in relation to theories, show the interwoven influences of several factors and environments. They indicate the big influence poverty has on several aspects of the child´s life. Both in this systematic literature review researched hypotheses – that the poverty setting influences the child´s development negatively and that the child shows difficulties to develop and participate in positive peer relations - can be confirmed. Future research should aim at generating knowledge about the impact of relative poverty on the child´s development and perceptions of holistic wellbeing. This is necessary to enhance the understanding of the impact of relative poverty on the child´s participation.