Abstract
This paper asks whether economic resources matter for children's outcomes. Both economic theory and public concern over high levels of child poverty suggest that there is an important association. Yet, research utilizing the first wave of the National Longitudinal Survey of Children and Youth (1994) suggested, surprisingly, that low-income status is a relatively unimportant correlate of children's outcomes. If true, the policy implication is that income transfers are relatively unimportant for children.
The goal of this paper is to re-examine the association between economic resources and children's health and success at school, two particularly "economic" outcomes (i.e., key elements of children's "human capital"; both have important implications for children's eventual labour market success). We move beyond current income and/or poverty status as a measure of the economic resources available to the child.
Economists would argue that wealth and income flows are also vital components of the economic resources available to a family. As well, traditional economic reasoning also suggests that, income constant, families with more time are better off than those with less. When we control for both housing and available parental time per week, we find that children who live in owner-occupied housing have better outcomes than children who do not; children who live in housing in need of major repairs have worse outcomes. This finding represents an additional channel through which economic resources can influence outcomes for children. Weekly hours of parental time available has no statistically significant association with child health; however, income constant, more hours of parental time available each week significantly improves a child's success at school.
These results indicate that while "longer-term" income is an important factor in child well-being, measured by health and educational success, other measures of economic resources are also important. The policy conclusions associated with "low or moderate association between income and child well-being " may be misleading. Income transfers may have an additional relationship with child well-being if they assist families with children to accumulate assets such as housing or if they increase parental time spent with children. These attributes are associated with better outcomes for children even after controlling for income. Other policy instruments which may improve outcomes are extended parental leave, home ownership assistance plans or assisting low-income families with the completion of housing repairs.
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