PARENTAL EARNINGS AND CHILDREN'S WELL‐BEING: AN ANALYSIS OF THE SURVEY OF INCOME AND PROGRAM PARTICIPATION MATCHED TO SOCIAL SECURITY ADMINISTRATION EARNINGS DATA

I. INTRODUCTION In the aftermath of the Great Recession, approximately one in five children in the United States lives in poverty, making children the poorest age group in the United States (Children's Defense Fund 2010; Land 2010). Comprehensive measures of child well-being have also begun to decline after showing steady improvement for most of the past 20 years. Given this backdrop, efforts to improve the material conditions of children are likely to remain a salient issue for policymakers for many years. An obvious target for policymakers is to improve the economic situation of parents. Indeed, a vast literature in the social sciences has studied the association between parental income and children's outcomes to establish the importance of parental economic resources on children's well-being. One limitation of many of these studies is the lack of availability of parental income or earnings histories over long periods of time. It is well established that the bias in using single year measures of parental income to proxy for long-run income can be sizable and can vary by parental age (Solon 1992; Mazumder 2005; Haider and Solon 2006). Indeed a number of studies have shown that the estimated associations between parental income and child well-being grow larger as parent income is measured over progressively longer time periods (Miller and Korenman 1994; Blau 1999). We further extend these findings using a unique dataset that includes a rich set of measures of child well-being that is also linked to administrative data containing long-term parental earnings histories for much larger samples of families than has typically been available. Specifically, our dataset pools families from the 1984, 1990-1993, 1996, 2001, and 2004 panels of the Survey of Income and Program Participation (SIPP). Each of these SIPP samples were matched to earnings histories contained in Social Security Administration (SSA) records. We use the administrative data to construct long-term time averages of parents' earnings. We use these time averages of parent earnings to estimate the association between parent earnings and childhood well-being. We use SIPP topical modules on Children's Well-Being, Functional Limitations and Disability, Health Status and Utilization of Health Care, and Extended Measures of Well-Being to obtain a broad set of measures related to childhood health and well-being. We find that across virtually all of our indicators of childhood well-being, longer time averages lead to substantially larger estimates. In some cases, the associations more than double compared to using a single year of earnings. In certain instances, the estimates are only statistically significant when using the longer time averages. Among our substantive findings we show that a doubling of a 7-year average of earnings is associated with a 48% drop in the mean probability of a teenager reporting poor health, a 39% drop in the mean probability of repeating a grade, an 18% drop in the mean probability of being suspended, a 75 percentage point drop in the mean probability of having insufficient food, and a 6 percentage point increase in the mean number of times a child saw a doctor. Notably, these estimates are 25%-120% larger than those based on using a single year of earnings. Relative to the earlier studies that have shown similar patterns, we use much larger samples and do not rely on self-reported earnings. We also exploit the very long earnings histories available in the SSA data to examine how the timing of parent earnings received during particular periods of the child's life is associated with adolescent health status, the likelihood of enrolling in college, and adult earnings. We find suggestive evidence that for college enrollment and adult earnings, parental earnings received during the school-going years have a stronger association than earnings received earlier or later in the child's life. We think that this is an important area for future research to further explore. …