Income supplements for parents could tackle inequality.

Income supplements for parents of young children could tackle entrenched long-term inequalities

By Greg J. Duncan and , | October 2014 

Reducing family poverty, particularly in very early years, may diminish the educational gap at age 5 that’s so hard to shrink.

How important is it that your mother avoided poverty during pregnancy and during the first few years after you were born? The answer is that what happened in these early years can prove life-determining. Decades later, your family’s income in those years is associated with your own earning capacity and job security, as well as a host of vulnerabilities to ailments such as arthritis and hypertension.

This is a startling correlation, but it’s not difficult to see the impact of what happens in those crucial early years. The cognitive abilities of children of the wealthiest 20 per cent of Americans grow more quickly than those of their peers born into the poorest 20 per cent of families. By age 5, as they start formal schooling, poorer children are already a year behind their wealthier peers educationally. Typically, the subsequent 12 years of education fail to narrow the disparity.

Schooling no doubt helps to compensate for some of the differences at home. But, throughout the school years, the inequality of family resources pushes in the opposite direction. Compared with wealthier children, poor children have far fewer enrichment resources—for example, books, computers, high-quality child care, summer camps, and private schools—and the gap is growing wider. Forty years ago, low-income families spent about $880 (in 2012 dollars) per child annually on such resources, while higher-income families spent more than $3,700, already a substantial difference. By 2005-2006, low-income families had increased their spending to almost $1,400, but high-income families had increased theirs much more, to over $9,300 per child. The difference in spending between the two groups had almost tripled in the intervening years. The largest spending differences were for activities such as music lessons, travel, and summer camps.

“We may be missing a trick in not focusing interventions on more income support during pregnancy and the first two years, when children’s brains are developing and family influence is at its most important.”

Economic change is making an already unequal situation even more unfair for the children of the poor. We know that income inequality has worsened in the past 40 years, particularly in the US, and significantly in other countries. The result has been a very sharp increase in the gap between poorer and wealthier children in terms of test scores at school and college graduation rates.

The fundamental difference between the children of the poor and the well-off is established by the age 5, and poorer children rarely make up the ground they’ve lost by then. We know that this loss is probably caused by some combination of genetics and the kinds of environments that an educated parent provides, but some of it also springs from the advantages that money itself can buy.

A big question for my research is: How much of the effect is simply caused by low income, once other effects are taken into account? After all, policies can change incomes much more easily than they can change most of the other things that determine young children’s development. To assess the unique role of income, we are launching an experimental study. We plan to recruit 1,000 low-income new mothers in four areas of the U.S. and randomly assign half to receive an extra $4,000 annually for three years while the other half receive an extra $240 a year for the period. Everyone will be better off, but half the families will receive a lot more than the others.

Our research team consists of neuroscientists as well as behavioral scientists. We will examine the children at age 3, using EEGs to assess differences in electrical activity in their brains as well as more conventional methods to assess cognitive functioning and socio-emotional behaviors. Additionally, at ages 1 and 2, we will collect information comparing families in the two groups.

We hope to establish whether the higher income from the program affects the mother’s ability to delay returning to the workforce and to purchase enrichment resources, such as books. The study will explore whether the families who receive $4,000 are able to move to a better neighborhood or higher-quality accommodations. We will also measure mothers’ stress levels and videotape mother-child interactions to monitor the mothers’ responsiveness to their children. This is important because we know that poverty can create stress that leads parents to reduce the time and attention they offer their children, which can in turn undermine their children’s wellbeing.

Our work does not question the well-documented fact that pre-school childcare interventions can help disadvantaged children. But it does ask whether we may be missing a trick in not also focusing interventions on income support in the very early years, when children’s brains are developing fast and family influence is at its most important.

I am a skeptical academic, but, if I were asked for policy ideas, I would say the existing evidence is consistent with providing, let’s say, supplements to existing transfer programs in the U.S. such as the Earned Income Tax Credit or Child Tax Credit – gearing those benefits so that families with young children receive higher amounts. Parents with young children tend to be young themselves and to be in the early stages of their working lives, so family incomes tend to be lowest and poverty rates highest in families with younger children. The need is clearly greater in this group, and the evidence suggests that the sensitivity of children’s development to family income is also greater in the early years.

We need to discuss and research these questions now, even if the answers might prove controversial and unpalatable to those uncomfortable with larger income transfers to the poor. Over the past 40 years, the wages of the unskilled have stagnated, while those of the wealthy have increased substantially. In other periods of history, the wages of these groups have typically gone up and down together. We have to understand how technological change, in exacerbating inequality, may be affecting very young children, their lifetime prospects and, possibly, the longer-term role they can play in strengthening our economy.


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