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Skip module menu and go to index Update on Analytical Studies Research Online catalogue Low income and inequality Earnings, income and wealth Employment, unemployment and working time Education and training Immigration Labour turnover Workplace studies Demographic groups Institutional factors Spatial analyses Trends and conditions in CMAs Data development Other More information Analytical studies branch research paper series

Income and the Outcomes of Children

by Shelly Phipps and Lynn Lethbridge
Business and Labour Market Analysis Division
Analytical Studies Branch Research Paper Series, No. 281


While it is now well-established that there is a strong association between income and the wellbeing of adults, more controversy concerning the link between family income and child outcomes is apparent in the research literature. Canadian studies using the first cycle of the National Longitudinal Survey of Children and Youth (NLSCY) have found relationships between child outcomes and low-income status and/or family income which are small in magnitude or even insignificant. These results appear contrary both to economic theory and to general public discourse, which clearly makes the case that income is a key input to children's well-being. Understanding the link between income and children's wellbeing is vital for policy formulation, as it could result in changes which could help transfer programmes become more efficient and effective.


This research paper examines whether various measures of family income are associated with the cognitive, social/emotional, physical and behavioural development of children.


The study finds that regardless of age or how income is measured, higher family income is almost always associated with better child well-being. Among children in lower income families, incremental increases in household income are found to be associated with better child development outcomes. Increases in income continue to remain associated with better well-being, even once children are out of low income. In fact, the study does not find a point above which high income ceases to benefit children's development. In particular, children's cognitive and behavioural development measures appear to have the strongest associations with levels of family income.

The results show that changes in family income appear to be less important for child outcomes than levels of family income for 8- to 11- and 12- to 15-year-olds. However, for the 4- to 7-year-old group, changes in family income are more important particularly for emotional development scores.

Data source(s)

Data from the National Longitudinal Survey of Children and Youth were used to assess a range of measures of well-being among children between the age of 4 and 15 years in 1998, whose family composition remained unchanged between 1994 and 1998.

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