The Consequences of Income Instability for Children's Well‐Being

Abstract

Income instability is an important and understudied dimension of the established empirical relation between family income and children's healthy development. Frequent fluctuations in income may influence daily processes and routines of family life, but the nature of such effects also may vary by specific patterns of income instability, parents' responses, and children's characteristics. In this article, we review existing theory and research on income, family functioning, and child development to better understand the potential implications of income instability for children's development. We also integrate theoretical insights from developmental psychology, economics, sociology, and social neuroscience to propose a set of testable hypotheses for social science investigations on this topic.

Association between income trajectories in childhood and psychiatric disorder: a Swedish population-based study

“…The finding that children in the lowest income trajectory had a markedly increased risk for early adulthood psychiatric disorder confirms previous associations found between childhood economic disadvantage and psychiatric disorder,4 5 12 13 27 especially among children living in poverty 28 29. Families in this group had annual mean incomes below the European Union's (EU) definition of relative poverty as an income below 60% of the median 30.…”

“…Several mechanisms explaining these associations have been suggested 1 9 12 14 28. Family financial hardship is intertwined in a complex manner with several co-factors, such as parenting quality, family structure and parent psychological factors, all of which may affect children's mental health 28.…”

“…Until now, only a few studies have examined variation in childhood family income and its association with health and social outcomes 10–12. These studies have found unfavourable relationships between childhood family income instability and children's educational attainment,10 11 development12 and behavioural problems 12. These studies have mostly focused on income fluctuation in general, but have also suggested that income fluctuations may be particularly harmful among low-income families.…”

“…There are reasons to believe that income variations are a source of stress for children and parents, particularly in low-income families 10 12 13. For instance, large swings in income may contribute to more household chaos and family instability, and the effects of income instability may also interact with children's developmental processes 12…”

A Review of the Recent Trends in the Relationship between Unemployment and Families

“…The longer the experiences of job loss lasted, worst results of youth development and welfare effects were found (Frasquilho, de Matos, Gaspar, & de Almeida, 2016). The same study illustrated that depending upon families income level and trend of that income overtime, income instability can have variable and detrimental consequences for children's well-being (Frasquilho, de Matos, Gaspar, & de Almeida, 2016;Hill, Gennetian, Wolf, & Tubbs, 2013). To slightly contradict this finding, research has also indicated an alternative pathway to relatively less damaging outcomes of young adult's livelihood during economic hardships.…”