We Americans like to believe that all kids have an equal chance to succeed. But in reality, “hundreds of studies have documented the association between family poverty and children’s health, achievement, and behavior,” wrote education professors Jeanne Brooks-Gunn and Greg J. Duncan in Future of Children.

And “more than a decade of research shows that increasing the incomes of low-income families—without any other changes—can positively affect child development, especially for younger children,” according to 2007 Congressional testimony by Jane Knitzer, director of the National Center for Children in Poverty. “Money matters for child development.” Why?

According to a study by Brooks-Gunn, Jean Yeung, and Miriam Livner, higher income improves children’s learning because it enables their parents to provide “better living conditions and learning materials . . . adequate food, and . . . high-quality child care.” More income improves children’s emotional development, on the other hand, because it relieves pressures that make parents “more likely to be emotionally distressed, less supportive, and to use punishment such as spanking.”

Better income, better outcomes

Money matters more for children with less

Researchers found: When family income increased, children were better able to identify colors, letters and shapes, and knew more words. When a family of four living in poverty saw an increase of $13,400 over three years, for example, children scored as well as those in families with twice the income.

How they know: This 2001 study tracked 1,216 low-income families with young children for three years and looked at how children performed on cognitive tests as family income changed.

Lifetime costs of early childhood poverty

Researchers found: Eliminating early childhood poverty would boost the lifetime earnings of an individual by (from) $53,000 to nearly $100,000, and reduce the risk for incarceration and dependence on programs like food stamps or welfare.

How they know: This 2005 study of data on individuals from childhood to adulthood looked at the relationships between childhood family income and adult outcomes, such as earnings, completed schooling, crime, and health.

EITC boosts student test scores

Researchers found: For each $1,000 increase in a family’s annual income, the children’s math scores went up by 2.1% percent, reading scores by 3.6%.

How they know: This 2005 study of 6,000 families over two decades compared increases in family income through the Earned Income Tax Credit and their children’s reading and math test scores.

More money for moms, more successful kids

Researchers found: When poor mothers had more money—whether from earnings or cash payments—their kids did better in school. They repeated grades less frequently and had fewer behavioral troubles.

How they know: This 2002 study compared Minnesota welfare families that got additional cash incentives with those that did not.

Earned Income Tax Credit

Increases employment among families on welfare.(1)
Raises children’s scores on math and reading tests.(2)

Food stamp program

Reduces children’s “food insecurity,” thereby reducing the risk of poor health, anemia, and learning and behavioral problems.
Improves school achievement.(3)

Affordable housing

Improves children’s nutrition (by freeing money for food). Reduces stress and mental health problems.(4)
Reduces movement from school to school, thereby increasing school success.(5)
In combination with other programs, helps families on welfare improve employment and earnings.(6)

Articles cited

Articles cited for Money matters for child development

Dearing, E. & McCartney, K. (2001) Change in Family Income-to-Needs Matters More for Children with Less. In Child Development, 11-12/01. (abstract) http://www3.interscience.wiley.com/journal/118968726/abstract?CRETRY=1&SRETRY=0

Knitzer, J., (2007). Testimony before the House Ways and Means Committee on the Economic and Societal Costs of Poverty. http://www.nccp.org/publications/pub_705.html 

Yeung, W.J., Linver, M.R., Brooks-Gunn, J. (2002). How Money Matters for Young Children's Development: Parental Investment and Family Processes, In Child Development, 11-12/02. (abstract)
http://www.ingentaconnect.com/content/bpl/cdev/
2002/00000073/00000006/art00017

Gennetian, L.A. & Miller, C. (2002). Children and Welfare Reform: A View from an Experimental Welfare Program in Minnesota. In Child Development, 3-4/02. (abstract) http://www3.interscience.wiley.com/journal/118938922/abstract

Dahl, G. & Lochner, L., (2005). The Impact of Family Income on Child Achievement. Institute for Research on Poverty, Discussion Paper no. 1305-05.  (abstract) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=711885

Duncan, G.J., Kalil, A., Ziol-Guest, K., Economic Costs of Early Childhood Poverty. (2008). Partnership for America’s Economic Success. (full text)  http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/
Partnership_for_Americas_Economic_Success/Duncan_paper.pdf

Brooks-Gunn, J. & Duncan, G.J. (1997). The Effects of Poverty on Children. In Future of Children, Summer-Autumn 1997. (full text)   http://futureofchildren.org/futureofchildren/
publications/docs/07_02_03.pdf

See also:
Fernald LC, Gertler PJ, Neufeld LM. (2008). Role of cash in conditional cash transfer programmes for child health, growth, and development: an analysis of Mexico's Oportunidades. In Lancet, 3/8/08 (full text)  http://www.thelancet.com/journals/lancet/article/PIIS0140673608603827/fulltext

Articles cited for chart

(1) Eissa, N. & Hoynes, H. (2006). Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply. National Bureau of Economic Research (digest) . http://www.nber.org/digest/aug06/w11729.html


(2) Dahl, G. & Lochner, L. (2005). The Impact of Family Income on Child Achievement. Institute for Research on Poverty. (abstract)  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=711885


(3) Children’s Sentinel Nutrition Assessment Program. (2007). Food Stamps as Medicine.  (full text)  http://www.c-snap.org/upload/resource/
food_stamps_as_medicine_2007.pdf


(4) Center for Housing Policy. (2007). The Positive Impacts of Affordable Housing on Health. (full text)  http://www.practitionerresources.org/cache/documents/651/65101.pdf


(5) U.S. General Accounting Office (1994). Elementary school children: many change schools frequently harming their education. (full text)  http://archive.gao.gov/t2pbat4/150724.pdf


(6) Low Income Investment Fund (2005). Literature Review: Impact of Affordable Housing on Individuals and Communities. (full text)
http://www.liifund.org/MEDIACENTER-NEW/
LIIF%20publications/Housing_Report_pdf.pdf

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