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This study investigates the extent to which family income is associated with an extensive range of child cognitive and behavioural outcomes in a cohort of almost 19 000 British children born between 2000 and 2001. Merging the economists' and developmental psychologists' approaches, it also attempts to identify the main mechanisms through which family economic resources translate into better developmental outcomes for children. The relative and joint relevance of three groups of mediating factors (parental stress, parental investment and other family-related pathways), identified from the recent economic and psychological literature, are examined both in a cross-sectional ('mopping-up' approach) and in a panel data (fixed effects models) context. Results indicate a weak or absent direct effect of family economic resources on child development after controlling for potential mediating mechanisms. The study also identifies key mediating factors (e.g. maternal depression, a cognitively stimulating home environment, parenting practices and length of breastfeeding) that could be targeted by government initiatives in order to effectively improve children's intellectual development and behaviour beyond what income redistribution can achieve. Copyright © 2010 John Wiley & Sons, Ltd.

Original publication





Health Economics

Publication Date





1201 - 1225