Economic Resources and Children's Health and Success at School

3. Review of Empirical Literature

The framework discussed above is very clear that income should matter for children's well-being, yet as noted in the introduction, Canadian studies using the first wave of the National Longitudinal Survey of Children and Youth have found small, and sometimes even statistically insignificant associations, depending upon the measure of income/poverty and the component of children's well-being studied (see Curtis, et.al., 1998; Dooley, et al., 1998a,b)

Several excellent studies in the United States have already made the point that "permanent" income may be a better measure of economic resources than current income, in the context of studying the role of income as a determinant of children's well-being (see, especially, Blau 1998, Korenman et al. 1995, Mayer, 1997). The primary data source for this work has been the National Longitudinal Survey of Youth's (NLSY) Mother and Child Supplement which provides very long income histories. At this stage, although there is consensus that permanent income matters more than current income, there is disagreement as to the magnitude of the effects.⁶

Korenman, et al. (1995) interpret their results to indicate a "moderate to large" effect of changes in long-term poverty status on children's cognitive development. Mayer (1997) reviews existing literature and utilizes several different US data sets and methodologies to conclude that the effect of increases in parental income on child outcomes, ceteris paribus, "is nowhere near as large as many political liberals imagine, neither is it zero as many political conservatives seem to believe" (p. 143). She goes on to say that although the effect on any single outcome may be small that most outcomes seem to be affected by income to some extent, thus increasing income may have a substantial cumulative impact. Therefore, changes in the distribution of income (increasing income to the poor) may be as cost-effective as any other policy.

Blau (1999) finds only small effects. In fact he states that the income effects are so small that income transfers to poor families are likely to have very little impact on child development; "Policies that affect family income will have little direct impact on child development unless they result in very large and permanent changes in income." (P. 261).

The limited permanent income and moderate poverty effects found thus far in the US NLSY must be taken in context. Mothers in the survey are all very young, aged 14 to 21 in 1979. Thus, by the late 1980s or early 1990s, the time frame for the data used in the studies discussed above, mothers would be in their mid twenties to early thirties (mean age = 27.7).⁷ As a consequence of the young age of the mothers the children tend to be young as well (mean 5.7). The measure of permanent income used by both Blau (1999) and Korenman, et al. (1995) is an average of income or income /needs ratio measured over the available 13 years of data. This measure is averaged over the very early portion of these women's lifetime-income paths, and it is possible that this is not very reflective of future earnings capacity and thus permanent income or poverty. As well, of course, these studies pertain to the United States not Canada.

To date, two longitudinal data sets are available to investigate the association between child health and well-being and socioeconomic status in Canada. The Ontario Child Health Survey (OCHS) conducted in 1983 and 1987 and the 1994 and National Longitudinal Survey of Children and Youth (NLSCY), conducted in 1994 and 1996.

Findings using the OCHS indicate a consistently significant association between low income or poverty and psychiatric disorders (Offord, Boyle and Jones, 1987), social and educational functioning (Lipman and Offord 1994), and chronic physical health problems (Cadman et al., 1986a) in children. Studies using the longitudinal nature of the OCHS find that changes in income levels are very weakly correlated with changes in the levels of child health (Lipman and Offord 1996, Lipman, Offord and Boyle 1994 and Boyle et al. 1998). The studies that find a significant relationship between income and child health tend to limit the use of other explanatory variables.

Curtis et al. (2000) investigate the relationship between current low-income and low-average-income using the OCHS. Fifteen percent of families were poor in 1983 and 13% in 1987.

13% of children lived with families whose average incomes (between 1983 and 1987) were less the LICO⁸ and 7% of the children were from households with income below the LICO in both years. The study investigated the presence of emotional problems, cognitive problems, any health problems and an over-all health related quality of life score, the Health Utilities Index Mark 2 (HUI2).

As in the Koreman study, children from low-income families suffered from substantially more problems than did children from non-low-income families. Although current low-income had no statistically significant relationship with emotional problems in either 1983 or 1987, living in a family whose average income for the two years was less than poverty level increased a child's probability of having an emotional problem by 9 percentage points (from 44 to 53%) which was roughly comparable to the lone-mother association. Results were very comparable for HUI2 scores. For cognitive problems, both current and average low-income were negatively associated, though the effect was larger for average low-income. Curtis et. al. (2000) conclude that, like many of the NLSY studies, child outcomes are more strongly related to low-average income than low-current income. Contrary to some of the results coming out of the NLSY they find that the magnitude of income effects to be "large" for some outcomes.

⁶A more detailed literature review is provided in Curtis and Phipps (2000).
⁷The means are taken from Table A-1 of the Blau paper. No summary statistics for the entire sample were presented in the Korenman et al. paper.
⁸See companion paper to Curtis et al. (2000) for description of income measures.

Contents

Economic Resources and Children's Health and Success at School - September 2000

3. Review of Empirical Literature