We opened this chapter with questions regarding the processes by which family poverty influences children's development. To what extent does family income or its economic conditions make a unique contribution to children's development, above and beyond the many other conditions associated with poverty (e.g., parent education, family structure)? Does the source of income (i.e., employment vs. welfare receipt) matter for children's development? What proximal conditions and experiences in the home environment and in other socialization contexts mediate the relations between family economic status and children's developmental outcomes?

The weight of the evidence shows that income makes a significant contribution to intellectual development, school achievement, and socio-emotional development that is independent of related demographic and family structure influences (see Ripke & Crosby, 2002 for a more detailed review of this topic). Although much of the available literature is fundamentally correlational, we now have both random assignment experiments and studies using statistical techniques that simulate experimental tests showing that income affects children's academic and cognitive development above and beyond the effects of unmeasured third variables (e.g., parents' levels of motivation, personality attributes). Moreover, family income is only one indicator of material well-being; impacts on children's development probably depend on the level material hardship and families' noncash resources.

Although longitudinal and correlational studies have demonstrated that parenting practices mediate the effects of poverty, experimental studies of welfare and employment policies, including the New Hope study, consistently show little or no evidence that employment and income changes affect parenting practices. Instead, these experimental studies suggest that participation in programs such as New Hope affects the type and quality of child care and out of school activities children engage in, and that these are the pathways by which policies that increase income and offer child-care resources affect children's developmental outcomes.

Poverty predicts the amount, type, and quality of nonmaternal care that children receive, and the amount and types of out of school activities in which they participate. Children from low-income families are more likely to receive home-based and low-quality child care and less likely to participate in center-based care and structured out of school activities. These features of children's experience, in turn, contribute to cognitive and social development, and they appear to play a role in mediating the effects of poverty on intellectual and social development. Although the amount of research on child care and out of school time is smaller than the volume of work on family influences, the body of data available is subject to fewer methodological problems.

The effects of poverty on children depend upon the depth and duration of poverty, as well as the age of the child. Family income (including changes in income) during children's early years is related to cognitive and academic development in early and middle childhood, and adult earnings and work. Conversely, family income during adolescence is less likely to predict grades, educational attainment, or adult job characteristics.

Although longitudinal methods are invaluable in understanding the complexities of children's development in context, experimental designs have some unique virtues for elucidating these issues. The studies in the Next Generation synthesis are exceptions. They include the New Hope Project, which suggests that a package of benefits that make modest improvements in family material resources can have positive effects on children (Huston et al., 2001, 2003). A parallel experiment, the Canadian Self-Sufficiency Project (Morris & Michalopoulos, 2000), is a test of the effects of increased income using larger income supplements than those in New Hope. Single mothers on welfare can receive wage supplements of several thousand dollars if they leave welfare to work full time. Because Canada has universal health coverage, it is not necessary to provide health benefits, but no extra supplements were given for child care. This program also led to significant improvements in children's achievement (Morris & Michalopoulos, 2003).

In conclusion, it is not only important to understand the relations between poverty and children's development, but also the processes by which the conditions of poverty influence children for both theoretical and policy reasons. Events within the family and experiences outside the family are both important. Seeking to understand these processes will provide a more sophisticated basic science of development and will inform intelligent and effective policies.

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