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Family Income and Child Cognitive and Noncognitive Development in Australia: Does Money Matter?

  • Published:
Demography

A Commentary to this article was published on 06 March 2017

Abstract

This article investigates whether family income affects children’s cognitive and noncognitive development by exploiting comprehensive information from the Longitudinal Study of Australian Children. We include variables that represent parental investment, parental stress, and neighborhood characteristics to examine if these factors mediate the effects of income. Using dynamic panel data, we find that family income is significantly associated with children’s cognitive skills but not with noncognitive skills. Mother’s education, parent’s physical and mental health, parenting styles, child’s own health, and presence of both biological parents are the most important factors for children’s noncognitive development. For cognitive development, income as well as parents’ education, child’s birth weight, and number of books that children have at home are highly significant factors. We also find strong evidence to support the skill formation theory that children’s previous cognitive and noncognitive outcomes are significantly related to their current outcomes.

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Notes

  1. Child poverty rate is defined as the rate of children living in households with an income lower than 50 % of the country’s household size–adjusted median.

  2. Measured as the mean of responses on a 5-point Likert scale (1 = false, 2 = mostly false, 3 = sometimes false, 4 = mostly true, 5 = true). The assessment starts with a statement: “I now have some sentences to read out to you. Please listen to each one carefully and then pick the answer that best describes you.” The statement is then followed by specific descriptions: “I do lots of important things,” “Overall, I have a lot to be proud of,” “I can do things as well as most other people,” and “A lot of things about me are good.”

  3. Measured as the mean response on a 4-point Likert scale (1 = never, 2 = once or twice, 3 = about once a week, 4 = several times a week) to items such as “I hit or kicked someone,” “I grabbed or shoved someone,” “I threatened someone,” and “I said mean things to someone.”

  4. Measured as mean responses on a 4-point Likert scale (1 = never, 2 = once or twice, 3 = about once a week, 4 = several times a week) to items such as “Kids hit or kicked me,” “Kids grabbed or shoved me,” “Kids threatened me,” and “Kids said mean things to me.”

  5. We acknowledge an anonymous referee for suggesting that we include these measures.

  6. The weekly income data are derived from responses to the question, “Before income tax is taken out, how much does…usually receive from all sources in total?”

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Authors and Affiliations

  1. School of Commerce, University of Southern Queensland, Toowoomba, Australia

    Rasheda Khanam

  2. Australian Research Centre for Health Services Innovation, Queensland University of Technology, Brisbane, Australia

    Son Nghiem

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  1. Rasheda Khanam
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  2. Son Nghiem
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Correspondence to Rasheda Khanam.

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Khanam, R., Nghiem, S. Family Income and Child Cognitive and Noncognitive Development in Australia: Does Money Matter?. Demography 53, 597–621 (2016). https://doi.org/10.1007/s13524-016-0466-x

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