Income and Children's Achievement: Leveraging Data from Random-Assignment Experiments

Pamela Morris, Manpower Demonstration Research Corporation (MDRC)
Greg J. Duncan, Northwestern University
Chris Rodrigues, Manpower Demonstration Research Corporation (MDRC)
Heather D. Hill, Northwestern University
Elizabeth Clark-Kauffman, Northwestern University

Although many studies have examined the association between family income and child development, two crucial issues remain to be settled. First, what is the causal relationship? Second, do the effects of economic conditions on children depend upon the child's age? By exploiting random assignment to income-boosting welfare-reform programs, this study utilizes an instrumental variables (IV) estimation strategy to identify the ways in which changes in parents' income affect children school achievement, controlling for changes in parents' employment. Preliminary results find significant, although small, benefits of increased income for preschool children's achievement. At the same time, few effects of income are found for middle childhood and adolescent children. By integrating an IV estimation strategy with the strength of an experimental design, this work has the potential to significantly advance our understanding of the causal effects of income on children's development, and thereby inform research and policy.