The mechanisms mediating the effects of poverty on children's intellectualdevelopment

Although adverse consequences of poverty for children are documented widely , little is understood about the mechanisms through which the effects of po verty disadvantage young children. In this analysis we investigate multiple mechanisms through which poverty affects a child's intellectual developmen t. Using data from the NLSY and structural Equation models, we have constru cted five latent factors (cognitive stimulation, parenting style, physical environment, child's ill health at birth, and ill health in childhood) and have allowed these factors, along with child care, to mediate the effects o f poverty and other exogenous variables. We produce two main findings. Firs t, the influence of family poverty on children's intellectual development i s mediated completely by the intervening mechanisms measured by our latent factors. Second our analysis points to cognitive stimulation in the home, a nd (to a lesser extent) to parenting style, physical environment of the hom e, and poor child health at birth, as mediating factors that are affected b y, lack of income and that influence children's intellectual development.