Child cognitive and non-cognitive development: Does money matter?

Khanam, Rasheda and Nghiem, Hong Son (2012) Child cognitive and non-cognitive development: Does money matter? In: 34th Australian Conference of Health Economists (AHES 2012), 27-28 Sept 2012, Darwin, Australia.

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This paper investigates the routes through which family income may affect children's cognitive and non-cognitive development by exploiting comprehensive information from the Longitudinal Study of Australian Children (LSAC). Our paper takes a new approach to combine economists' and psychologists' views in modelling the relationship between household income and child development outcomes. Using a dynamic panel data framework, this research contributes to the literature by examining the impact of contextual factors in child health and development. Our results reveal that when a basic set of covariates is used family income is strongly associated with child cognitive and behavioural outcomes. However, when indicators of parental investment, parental stress, parenting practice and neighborhood characteristics are controlled for, the income coefficients are no longer significant for most children's outcomes. We also find that income has higher effects on children cognitive development than upon their non-cognitive development. Our results suggest that the effect of income can be mediated by the family's ability to invest in materials, services and a home environment, parenting practice and neighbourhood characteristics. We find that parental mental health and parenting practice are particularly important for childrens' behavioural and emotional development. When unobserved heterogeneity is controlled for using a random and fixed effect estimators, we did not find any significant association between family income and cognitive and emotional and behavioural development of children. We also find evidence of the dynamic nature of children's human capital investment that current cognitive and non-cognitive outcomes of a child are significantly related to previous outcomes.

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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Paper)
Refereed: Yes
Item Status: Live Archive
Additional Information: Interested person can contact first
Faculty/School / Institute/Centre: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 28 Jan 2013 05:57
Last Modified: 26 Jun 2017 05:15
Uncontrolled Keywords: Family income, behavioural development, health inequalities, panel data, Australia
Fields of Research : 14 Economics > 1402 Applied Economics > 140208 Health Economics
Socio-Economic Objective: C Society > 92 Health > 9205 Specific Population Health (excl. Indigenous Health) > 920501 Child Health

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