Her mother later married Edward Pidgeon, a police captain.
Allen first performed at the age of three, doing an Irish dance at a church social. Her mother sewed dresses for Allen and her sisters Bessie, Pearl and Hazel to wear while performing Irish and Scottish dances. The family taught dancing in the basement of their house. From the start, Allen was determined to get into show business. Almost every day after coming home from the Star of the Sea Catholic School, Allen would walk from theater to theater dreaming of a time when her picture would be posted in one. She loved the film star Charlie Chaplin and, for her sixth birthday, her stepfather arranged for her to meet him.
Allen began working professionally as a singer while she was still a child. During school vacations she sang in local movie houses. After graduating, she and her sisters performed a song and dance act as The Four Colleens. When they broke up, Allen became part of a vaudeville act, for which she was paid $22 a week. (Vaudeville was a type of entertainment popular in the early 20th century, consisting of a variety of acts, such as song-and-dance, juggling and comedy routines.) At about age 18, Allen quit that act and found herself alone and unemployed in New York City.
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