How important is income in determining children's outcomes? A methodology review of econometric approaches

Laura Blow
Alissa Goodman
Greg Kaplan
Ian Walker
Frank Windmeijer

Published on 1 August 2005

This document reviews a number of empirical methodologies available to answering policy questions about the relationship between income and child outcomes.

Policymakers have used the wide body of research evidence from around the world, which purports to show that children who grow up in poor families experience a wide range of negative outcomes, to justify large increases in benefits to families with children.

This document reviews a number of empirical methodologies available to researchers for answering these important policy questions. For each methodology we set out the intuition behind the method, and an example of where it has been used effectively to answer a relevant policy question. We restrict ourselves to methodologies found within the econometric literature.