Income and Child Development

Abstract

We examine how income influences pre-school children’s cognitive and behavioral development, using new data from a birth cohort study of children born at the end of the 20th century. On average, low income children have lower PPVT scores, more mother-reported aggressive, withdrawn, and anxious behavior problems, and also more interviewer-reported problems with behavior, than more affluent children. For most outcomes, differences in the home environments are sufficient to explain the link between low income and poorer child outcomes. Policy simulations indicate that income transfers can potentially play an important role in reducing gaps in development between poorer and richer children.