The Importance of Family Income in the Formation and Evolution of Non-Cognitive Skills in Childhood

There is a well known positive association between family income and children's development, including health and academic performance. This relationship is a potentially importance factor in the intergenerational transmission of socioeconomic status and has been shown to be a robust finding across countries and time periods. In contrast, much less is known about the relationship between family income and other domains of children's development, such as noncognitive (or socio-emotional) skill formation. This is an important gap, as these non-academic skills have been hypothesized to be a critical link between early outcomes and adult socioeconomic status. Indeed, multiple successful interventions targeted to young children seem to primarily improve long-term outcomes by enhancing non-academic skills. This paper presents new evidence of the importance of family income in the formation and evolution of children's non-cognitive skills using a recent panel dataset from the US that tracks children between Kindergarten and 5th grade. Findings suggest an important divergence in noncognitive skills based on family income that accumulates over time and does not seem to be explained by children's health status differences.