Although adverse socioeconomic conditions are correlated with worse child health and development, the effects of poverty-alleviation policies are less understood. We examined the associations of the Earned Income Tax Credit (EITC) on child development and used an instrumental variable approach to estimate the potential impacts of income. We used data from the US National Longitudinal Survey of Youth (n = 8,186) during 1986–2000 to examine effects on the Behavioral Problems Index (BPI) and Home Observation Measurement of the Environment inventory (HOME) scores.

We show that differences in childhood environments play an important role in shaping gender gaps in adulthood by documenting three facts using population tax records for children born in the 1980s. First, gender gaps in employment rates, earnings, and college attendance vary substantially across the parental income distribution. Notably, the traditional gender gap in employment rates is reversed for children growing up in poor families: boys in families in the bottom quintile of the income distributionare less likely to work than girls.

This study documents an increase in the prevalence of extreme poverty among US households with children between 1996 and 2011 and assesses the response of major federal means-tested transfer programs. Extreme poverty is defined using a World Bank metric of global poverty: $2 or less, per person, per day.