Income is a direct measure of economic success for adults. This assessment sheet also explores how parents’ or a family’s income affects later-life outcomes for children and adolescents.

Evidence of the Relationship between Predictor and Related Outcomes

• Income is a direct measure of mobility as a measure of economic success. At particular life stages, it is also predictive of later-life outcomes across multiple mobility principles (Duncan, Magnuson, and Votruba-Drzal 2017).
• Parents’ income affects children’s academic achievement. Income gains have consistently been shown to improve elementary school students’ achievement; evidence of achievement changes for adolescents is mixed. Family income has been shown to affect high school graduation, completed years of schooling, and educational attainment, but not test scores.
• Income affects the behavioral and mental health outcomes of children and youth. Children from low-income families are generally rated as having more behavioral problems, and low-income adolescents have higher rates of nonmarital fertility and criminal activity. Studies have demonstrated that low income is associated with detrimental psychological functioning, such as antisocial behavior, inadequate self-regulation, and poor mental health.
• Duncan, Magnuson, and Votruba-Drzal (2017) provide a review of the evidence of the effect of income status on later-life outcomes for children and adolescents. Their review suggests a strong relationship between income and future economic success, educational attainment, and health outcomes.

How Investments Can Influence the Predictor at State or Local Levels

Communities’ abilities to directly raise the incomes of their lowest-income residents may be constrained by state laws and available resources. Some communities, such as Stockton, California, have partnered with philanthropies to provide a basic income (West et al. 2021). Communities could also consider raising their minimum wages or instituting living-wage ordinances to ensure that all those contracting with the jurisdiction must pay a living wage that is generally higher than the preexisting minimum wage (Brenner and Luce 2005; Cengiz et al. 2019). Beyond such efforts, communities could pursue policies to increase local employment opportunities and enhance the skills of the local workforce .   

References

The primary reference is marked with an asterisk.

Brenner, Mark D., and Stephanie Luce. 2005. Living Wage Laws in Practice: The Boston, New Haven and Hartford Experiences. Amherst, MA: Political Economy Research Institute.

Cengiz, Doruk, Arindrajit Dube, Attila Lindner, and Ben Zipperer. 2019. “The Effect of Minimum Wages on Low-Wage Jobs.” Quarterly Journal of Economics (134) 3: 1405–54.

* Duncan, Greg, Katherine Magnuson, and Elizabeth Votruba-Drzal. 2017. “Moving Beyond Correlations in Assessing the Consequences of Poverty.” Annual Review of Psychology 68: 413–34.

West, Stacia, Amy Castro Baker, Sukhi Samra, and Erin Coltrera. 2021. “Preliminary Analysis: SEED’s First Year.” Stockton, CA: Stockton Economic Empowerment Demonstration.