The association between family income and children's developmental and behavioural outcomes has been extensively investigated by developmental psychologists.
More recently the debate concerning the adverse impacts of poverty on children's development has attracted the interest of economists and policy makers alike.
If family economic resources have a significant positive impact on children's cognitive and behavioural development, then cash transfers to low income families with children might play a crucial role in improving children's health, education and future labour market outcomes.
We use data from the Millennium Cohort Study, a UK nationally representative birth cohort study.
Focusing on two measures of child cognitive development (Bracken Basic Concept Scale-Revised and British Ability Scale naming vocabulary) and one measure of child behavioural outcome (Total Difficulties Score), we investigate the family income-nexus by adopting an instrumental variable approach.
The latter allows us to deal with the potential endogeneity of parental income.
We expect our results to increase understanding of the mechanisms underlying the relationship between income and childhood cognitive/behavioural outcomes.
A significant inverse relationship between family income and childhood outcomes, as preliminary results show, should inform government public health and fiscal policies in this area and help to identify areas where government efforts on tackling child poverty-driven inequalities should be targeted.
One paper reporting the results of this work was published in late 2009 in Social Science and Medicine.