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CEP discussion paper
Childhood circumstances and young adulthood outcomes: the role of mothers' financial problems
Marta Barazzetta, Andrew E. Clark and Conchita D'Ambrosio March 2019
Paper No' CEPDP1609:
Full Paper (pdf)

JEL Classification: I31; I32; D60

Tags: income; financial problems; child outcomes; subjective well-being; behaviour; education; alspac

We here consider the cognitive and non-cognitive consequences on young adults of growing up with a mother who reported experiencing major financial problems. We use UK data from the Avon Longitudinal Study of Parents and Children to show that early childhood financial problems are associated with worse adolescent cognitive and non-cognitive outcomes, controlling for both income and a set of standard variables, and in value-added models controlling for children’s earlier age-5 outcomes. The estimated effect of financial problems is almost always larger in size than that of income. Around one-quarter to one-half of the effect of financial problems on the non-cognitive outcomes seems to transit through mother’s mental health.