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Income and Child Development. Lawrence Berger, University of Wisconsin Christina Paxson, Princeton University Jane Waldfogel, Columbia Univerity. Motivation. Poorer children are at greater risk for worse cognitive and behavioral outcomes. - PowerPoint PPT Presentation
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Income and Child Development
Lawrence Berger, University of WisconsinChristina Paxson, Princeton UniversityJane Waldfogel, Columbia Univerity
Motivation Poorer children are at greater risk for worse
cognitive and behavioral outcomes.
If the association between economic status and child outcomes is causal, it has implications for intergenerational transmission of poverty.
Policies and programs that improve outcomes for poorer children may break (or, dampen) the links between poverty across generations.
Previous literature Strong associations between family
incomes and children’s outcomes.
Issues: Measurement error and unobserved
heterogeneity. What are the routes through which money
matters? Is the association between income and children’s
outcomes larger for poorer children?
This paper
Examine the routes through which income and outcomes are associated.
Use data from the Fragile Families and Child Wellbeing Study.
Examine children’s cognitive and behavioral outcomes at age 3.
Specific questions How is income related to a variety of
measures of the home environment and to children’s outcomes?
How are child outcomes and home environment measures related?
Can income transfer programs be expected to have large effects on children’s outcomes?
Sample Children from 20 US cities, with an
oversample of nonmarital births.
The sample is about 50% black, 25% Hispanic and 25% white.
In-home observations done at age 3, making it possible to collect detailed measures of the home environment.
1,699 children
Variables
Income averaged over 3 periods Child outcomes:
PPVT Interviewer’s assessment of behavior Mother reported:
Aggressive behavior Withdrawn behavior Anxious behavior
Empirical Framework
“Production function”
(1) ,)ln(1
kjJ
j
kj
ky
kX
kk ZyXY
k=1...K.
Home environment measures and income
(2) jjy
jX
jj vyXZ )ln( , j=1...K.
Child outcomes and income
(3) ,)ln( kky
kX
kk eyXY k=1...K.
Question 1
How are measures of the home environment and child outcomes associated with income?
.4.6
.81
.7.8
.91
.85
.9.9
51
.6.7
.8.9
1
.51
0.5
1
.2.4
.6.8
1
0.5
1
.2.4
.6.8
1
.51
.2.4
.6.8
1
.4.6
.81
.94
.96
.98
1
.6.8
1
0.5
1
0 2 4 6 0 5 0 1 2 3 0 2 4 6 8
0 5 10 15 0 10 20 30 40 0 5 10 0 5 10
0 5 10 15 0 5 10 0 2 4 6 0 5
0 2 4 6 8 0 5 10 0 50 100
mother unresponsive mother harsh mother lacks verbal skills mother depressed
mother anxious mother stressed mother difficult to interview lack of material for stimulation
problems with block problems with home exterior problems with home interior home disorganization
safety problems in home food insecurity hours of TV/week
income < PL
PL < income < 2X PL
income > 2X PL
score
0.5
1
.2.4
.6.8
1
0.5
1
0.5
1
.2.4
.6.8
150 100 150 0 5 10 15 20 0 10 20 30
0 5 10 15 0 5 10 15
Child's PPVT score Interviewer-rated behavior Aggression index
Anxiety index Withdrawn index
income < PL
PL < income < 2X PL
income > 2X PL
score
Regression models Convert outcomes and home
environment measures to z-scores.
Estimate three ways: Controls for age, gender and city Extended SES controls (race, education,
mother’s PPVT) Experiment with IV strategies to handle
measurement error bias.
-.5
-.4
-.3
-.2
-.1
0.1
.2
safe
ty p
rob
lem
s
M a
nxio
us
negl
ect
M d
epre
ssed
M v
erba
l ski
lls
M h
arsh
tant
rum
hom
e in
terio
r
TV
unre
spon
sive
hom
e ex
terio
r
hom
e di
sorg
aniz
ed
M s
tres
sed
food
inse
curi
ty
M d
iffic
ult
bloc
k
lack
s st
imu
latio
n
OLS OLS, extended controls IV, extended controls
-.5
-.4
-.3
-.2
-.1
0.1
.2.3
PPVT Behavior probs Aggressive Withdrawn Anxious
OLS OLS, extended controls IV, extended controls
Are associations stronger for poorest children?
PPVT Behavior problems
Aggressive behavior
ln(y), y < PL 0.054
(0.057) –0.163 (0.070)
–0.144 (0.075)
ln(y), PL < y < 2x PL
–0.118 (0.153)
0.034 (0.164)
–0.348 (0.161)
ln(y), y> 2x PL 0.348
(0.099) 0.008
(0.091) –0.237 (0.093)
Test: coefficients equal groups
4.95 (0.007)
1.53 (0.218)
0.86 (0.424)
Answer: No
Question 1 summary With a few exceptions, income has larger
associations with material aspects of the environment.
Adding extended SES controls generally reduces coefficients, and IV (for measurement error) has only small effects.
Estimates for child outcomes are in line with previous literature.
Question 2
How are measures of the home environment related to child outcomes?
Table 2: Associations between child outcomes and income, with mediators
Child’s PPVT
Behavior problems
Aggressive behavior
Withdrawn behavior
Anxious Behavior
Panel 1: No mediators
ln(y) 0.068
(0.032) –0.082 (0.035)
0.121 (0.037)
–0.163 (0.036)
–0.118 (0.035)
Panel 2: All mediators
ln(y) 0.020
(0.032) –0.023 (0.035)
–0.036 (0.035)
–0.098 (0.035)
–0.052 (0.034)
Table 2: Associations between child outcomes and income (cont.)
PPVT Behavior problems
Aggressive behavior
Withdrawn behavior
Anxious Behavior
Mother unresponsive –0.105 (0.029)
0.132 (0.031)
0.059 (0.028)
0.047 (0.034)
0.022 (0.031)
Mother lacking verbal skills
–0.031 (0.028)
0.013 (0.030)
–0.054 (0.027)
–0.005 (0.032)
–0.072 (0.027)
Safety problems in home
–0.006 (0.030)
0.065 (0.025)
0.021 (0.027)
–0.023 (0.024)
0.011 (0.022)
Neglect scale 0.002
(0.023) 0.017
(0.021) 0.028
(0.024) 0.042
(0.026) 0.051
(0.025) Physical response to tantrum?
0.014 (0.023)
–0.007 (0.023)
0.095 (0.024)
0.004 (0.024)
0.021 (0.024)
Mother harsh –0.057 (0.025)
0.181 (0.025)
0.154 (0.026)
0.065 (0.028)
0.032 (0.025)
Mother difficult to interview
–0.077 (0.028)
0.188 (0.029)
–0.028 (0.029)
0.026 (0.029)
0.056 (0.030)
Table 2: Associations between child outcomes and income (cont.)
PPVT Behavior problems
Aggressive behavior
Withdrawn behavior
Anxious Behavior
Mother depression index
–0.011 (0.024)
–0.014 (0.024)
0.037 (0.027)
–0.006 (0.026)
0.034 (0.026)
Mother anxiety index –0.013 (0.024)
–0.004 (0.024)
0.009 (0.028)
–0.024 (0.027)
0.004 (0.027)
Mother stressed –0.012 (0.026)
0.030 (0.025)
0.249 (0.028)
0.165 (0.028)
0.184 (0.027)
Table 2: Associations between child outcomes and income
PPVT Behavior problems
Aggressive behavior
Withdrawn behavior
Anxious Behavior
Lack of materials for stimulations
–0.038 (0.023)
0.008 (0.022)
0.034 (0.026)
0.074 (0.030)
0.050 (0.027)
Hours of TV per week
–0.007 (0.025)
0.010 (0.023)
0.037 (0.024)
0.049 (0.025)
0.018 (0.022)
Problems with home exterior
–0.010 (0.030)
–0.004 (0.031)
–0.013 (0.034)
0.011 (0.034)
–0.028 (0.035)
Problems with home interior
–0.008 (0.026)
0.018 (0.027)
–0.022 (0.027)
–0.049 (0.027)
–0.012 (0.028)
Home disorganized 0.004
(0.027) 0.040
(0.027) –0.008 (0.027)
–0.007 (0.029)
0.027 (0.029)
Problems with block –0.060 (0.029)
–0.010 (0.032)
0.014 (0.036)
0.027 (0.033)
0.051 (0.034)
Food insecurity –0.015 (0.024)
0.015 (0.025)
0.037 (0.026)
0.032 (0.028)
0.004 (0.028)
Table 3: Contributions of home environment variables to R2
Child’s PPVT
Behavior problems
Aggressive behavior
Withdrawn behavior
Anxious Behavior
Extended SES controls
0.214 0.027 0.023 0.086 0.110
Parenting measures
0.107 0.382 0.201 0.077 0.054
Mental health measures
0.006 0.003 0.256 0.115 0.136
Physical environment
measures 0.019 0.007 0.020 0.046 0.020
Question 2 Summary
The association between children’s outcomes and income declines (a lot) when controls for the child’s home environment are included.
Parenting matters more than maternal mental health and the physical environment.
How should these results be interpreted? The mediation model—in which income
affects children’s outcomes through the home environment—is correct.
Aspects of the home environment may not be mediators, but may influence income (or be correlated with things that do).
The interpretation chosen has important implications for policy analysis.
Question 3
How will income transfer programs affect children’s outcomes?
We look at two policies: Case 1: Bring all families up to the poverty
line.
Case 2: Give an income transfer of $2400 per child ($3600 per infant) for families with incomes under $60K (Duncan and Magnuson).
Look at average differences between poor, near poor and “upper income”.
Table 5: Means of child outcomes within groups, actual and with transfer programs
Actual Case 1: Income to poverty line
Case 2: Transfer of $2400
PPVT Group 1: y< PL –0.244 –0.024 –0.124 Group 2: PL < y < 2x PL 0.042 0.042 0.085 Group 3: y> 2x PL 0.302 0.302 0.316
Behavior problems Group 1: y< PL 0.094 0.001 0.044 Group 2: PL < y < 2x PL –0.011 –0.011 –0.030 Group 3: y> 2x PL –0.124 –0.124 –0.130
Aggressive Behavior Group 1: y< PL 0.146 0.022 0.078 Group 2: PL < y < 2x PL –0.029 –0.029 –0.053 Group 3: y> 2x PL –0.179 –0.179 –0.187
Conclusions Even under the most “generous”
interpretation, simulated effects of income transfers are relatively small.
Raising all families to the poverty line (at a cost of $9000 per family per year at a minimum) produces (at most) a 1/5 of a standard deviation increase in the PPVT.
Alternatives? Possibly high quality child care.
