Understanding the Relationship between Parental Income and Outcomes in Middle Childhood

Paul Gregg, University of Bristol
Carol Propper, University of Bristol
Elizabeth Washbrook, Columbia University

In this paper we use unique cohort data from the UK to 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. We find that poor children are disadvantaged at age 7 to 9 across the full spectrum of outcomes, but that the factors underlying these deficits differ markedly. 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. Some specific mechanisms that we highlight are maternal smoking and breastfeeding, child nutrition, parental psychological functioning and the home learning environment.