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Understanding the relationship between parental income and multiple child outcomes: A decomposition analysis

  • Paul Gregg
  • Carol Propper
  • Elizabeth Washbrook

In this paper we explore the association between family income and children's cognitive ability (IQ and school performance), socio-emotional outcomes (self esteem, locus of control and behavioural problems) and physical health (risk of obesity). We develop a decomposition technique that allows us to compare the relative importance of the adverse family characteristics and home environments of low income children in accounting for different outcomes. Using rich cohort data from the UK we find that poor children are disadvantaged at age 7 to 9 across the full spectrum of outcomes, the gradient being strongest for cognitive outcomes and weakest for physical health. We find that some aspects of environment appear to be associated with the full range of outcomes - for example, maternal smoking and breastfeeding, child nutrition, parental psychological functioning. We also find some some aspects of the environment of higher income households hinder child development. We conclude that many aspects of growing up in poverty are harmful to children's development, and that narrowly-targeted interventions are unlikely to have a significant impact on intergenerational mobility.

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Paper provided by Centre for Analysis of Social Exclusion, LSE in its series CASE Papers with number case129.

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Date of creation: Dec 2007
Date of revision:
Handle: RePEc:cep:sticas:case129
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  1. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2003. "Why the Apple Doesn't Fall Far: Understanding Intergenerational Transmission of Human Capital," NBER Working Papers 10066, National Bureau of Economic Research, Inc.
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  3. A Chevalier & C Harmon & V O'Sullivan & I Walker, 2010. "The Impact of Parental Income and Education on the Schooling of their Children," Working Papers 610852, Lancaster University Management School, Economics Department.
  4. M. Anne Hill & June O'Neill, 1994. "Family Endowments and the Achievement of Young Children with Special Reference to the Underclass," Journal of Human Resources, University of Wisconsin Press, vol. 29(4), pages 1064-1100.
  5. Jane Waldfogel, 2002. "Child care, women's employment, and child outcomes," Journal of Population Economics, Springer, vol. 15(3), pages 527-548.
  6. Guang Guo & Kathleen Harris, 2000. "The mechanisms mediating the effects of poverty on children’s intellectual development," Demography, Springer, vol. 37(4), pages 431-447, November.
  7. Macintyre, Sally & Ellaway, Anne & Cummins, Steven, 2002. "Place effects on health: how can we conceptualise, operationalise and measure them?," Social Science & Medicine, Elsevier, vol. 55(1), pages 125-139, July.
  8. Paul Gregg & Stephen Machin, 2000. "Child Development and Success or Failure in the Youth Labor Market," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 247-288 National Bureau of Economic Research, Inc.
  9. Jo Blanden & Paul Gregg & Lindsey MacMillan, 2007. "Accounting for Intergenerational Income Persistence: Noncognitive Skills, Ability and Education," School of Economics Discussion Papers 0307, School of Economics, University of Surrey.
  10. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  11. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute for the Study of Labor (IZA).
  12. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
  13. David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
  14. Janet Currie & Mark Stabile, 2004. "Child Mental Health and Human Capital Accumulation: The Case of ADHD," NBER Working Papers 10435, National Bureau of Economic Research, Inc.
  15. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," NBER Working Papers 12006, National Bureau of Economic Research, Inc.
  16. Alison Aughinbaugh & Maury Gittleman, 2003. "Does Money Matter?: A Comparison of the Effect of Income on Child Development in the United States and Great Britain," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
  17. Erik Plug, 2004. "Estimating the Effect of Mother's Schooling on Children's Schooling Using a Sample of Adoptees," American Economic Review, American Economic Association, vol. 94(1), pages 358-368, March.
  18. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
  19. repec:tpr:qjecon:v:122:y:2007:i:1:p:119-157 is not listed on IDEAS
  20. Sandra L. Hofferth & Sally Curtin, 2005. "Poverty, food programs, and childhood obesity," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(4), pages 703-726.
  21. Lisa Gennetian, 2005. "One or two parents? Half or step siblings? The effect of family structure on young children's achievement," Journal of Population Economics, Springer, vol. 18(3), pages 415-436, 09.
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