Family Income Matters Most in Early Years, Study Says

By Debra Viadero — February 23, 2010 1 min read
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It’s no secret that growing up in poverty has a negative impact on children’s life chances. A new study suggests, however, that family income plays a more critical role in some stages of children’s development than at others.

According to this study, published in the current issue of Child Development, the key period seems to be from birth to age 5. University of California, Irvine researcher Greg Duncan and his colleagues analyzed data on a nationally representative sample of people born between 1968 and 1975, with an eye toward determining links between the level of a family’s income throughout the childhood years and a host of outcomes later on in children’s lives.

Were poorer children, for instance, more likely than others to have been arrested or employed by the time they reached their 20s and 30s? Were they healthy? Did they finish school? (All of this, of course, comes after controlling for a wide range of variables, such as parents’ education, whether the child’s parents were living together, birth order, and the part of the country where the family lived.)

The researchers found that the strongest links were between living in poverty before age 5 and having lower earnings and fewer work hours 30 years later. The researchers estimate that a $3,000 annual increase in income between a child’s prenatal year and 5th birthday is associated with 19 percent higher earnings and 135 more work hours.

So why are these findings important? The researchers give two reasons.

First, the study is the first to have detailed income information across the span of childhood. Researchers were able to collect data on income from jobs, food stamps, welfare payments, and other sources for at least 12 years of a child’s first 15 years of life and to track participants up until age 37.

Second, the study has implications for public policy. With the federal Earned Income Tax Credit, for example, low-income working families already can receive a refundable tax credit worth more than $4,800 a year. Policymakers could modify, or expand, such policies to focus on families with young children.

The bottom line, says Duncan, is that “our findings suggest that policymakers might do well to focus on situations involving deep and persistent poverty early in childhood.”

A version of this news article first appeared in the Inside School Research blog.