Trends and Divergences in Childhood Income Dynamics, 1970-2010

Changes in Cognitive Outcomes in Early Childhood: The Role of Family Income and Volatility

Associations between family income and child developmental outcomes are well documented. However, family income is not static but changes over time. Although this volatility represents income shocks that are likely to affect children’s lives, very few studies have so far examined its effect on early cognitive development. This study investigated associations between family income, volatility, and changes in cognitive outcomes in early childhood and examined whether these associations are dependent on a family’s overall income position. Data for the study spanned five waves of the Growing Up in Scotland longitudinal survey (N = 3,621). Findings indicate that income volatility was more prevalent among disadvantaged sociodemographic groups. In addition to average income, short-term volatility was associated with changes in child cognitive outcomes from ages 3 to 5. While upward volatility was associated with gains in expressive vocabulary, downward and fluctuating volatility were associated with declines in child problem-solving abilities. The association between volatility and changes in cognitive outcomes was similar for both children living in poverty and those from medium–high-income households. Our results suggest that policies aiming to cushion all families from negative income shocks, boost family income to ensure stability, and take low-income families out of poverty will have a significant impact on children’s cognitive development. Additionally, a more nuanced conceptualization of income is needed to understand its multidimensional impact on developmental outcomes.

Household economic instability: Constructs, measurement, and implications

A growing body of research demonstrates the multiple dimensions and dynamism of family income and employment. The metrics of household economic instability and their associations with household characteristics and hardship require further examination in order to compare across studies, subgroups, and historical periods. This paper empirically examines and compares commonly used measures of income and employment instability, how these measures inter-relate, vary by household characteristics, and how they predict household hardship. Using longitudinal data from the 2008 panel of the Survey of Income and Program Participation (SIPP), and focusing on households with children, this study examined a range of descriptive measures of economic instability, including in income, earnings, public assistance benefits, and employment status, and how these measures related to each other. Results indicate that overall rates of income and employment instability were high, particularly among less-educated families, those with young children, and those who did not own a home. Economic instability, particularly decreases in employment, was associated with increased household hardship three months later. Findings also show that the source of income included in the instability measure affects the patterns identified and conclusions drawn, whereas the specific type of measure used matters less. Results highlight the instability of public assistance benefits and suggest that safety net programs must take economic instability into account when designing programs and benefits.

Strengthening Social Programs to Promote Economic Stability during Childhood

Economic instability has increased in recent decades and is higher for families with low incomes and Black families. Such instability is thought to be driven primarily by precarious work and unstable family structure. In addition, the social safety net has become less of a stabilizing force for low‐income families, in part because benefits are often tied to employment and earnings. Too much change in economic circumstances may disrupt investments in children, parenting practices, and family routines—particularly if the economic changes are unpredictable, undesired, or not part of upward mobility. Given the considerable evidence that economic circumstances affect child health and development, economic stability can and should be an important goal of multiple policy domains. In this report, we describe economic instability, review the pertinent theories for considering how economic instability might matter to children, and describe ideas for policies that could reduce or moderate instability. We include policies that reduce instability in earnings, use public assistance to stabilize income or reduce material hardship, or enhance parents' capacity to deal with or avoid instability.