Tax credits boost school performance, study shows

A study in the United States, published today, found that increasing a family's annual income by $1,000 (£550) improved children's maths test scores by 2.1 per cent and their reading test scores by 3.6 per cent.

It also showed that if families were given the maximum $4,000 (£2,228) credit available under the earned income tax credit (EITC), one of the US's largest anti-poverty programmes, their future earnings could rise by as much as 2 per cent.

The findings have important implications for the UK and give support for more money to be given to the poorest families in tax credits. Gordon Dahl, associate professor at the University of Rochester, who carried out the research, said the UK's tax credit system was likely to yield similar results as in the US.

"The boost to children's test scores was much bigger than expected. It's not going to get you into Harvard or Oxford because it's not going to push you right to the top. But it is not a trivial increase. It is significant and would be enough to produce young people who earn higher wages for the rest of their lives."

In Britain one in four children is believed to live in poverty - defined as having a family income of less than 60 per cent of the national average. Professor Dahl said: "In the US one in six children currently lives in poverty, and it's a big issue in other countries too.

"Our research suggests that income transfers to poor families can help alleviate some of these consequences - in particular, that extra income can improve maths and reading achievement. Given that the explicit rationale for income support programmes, like the EITC, is often to improve the lot of children, our research provides policymakers with evidence that such programmes can have a positive impact."

The study, which was carried out with Lance Lochner of the University of Western Ontario, followed 6,000 children between the ages of five and 14. Its findings will be presented today at the 2005 World Congress of the Econometric Society being held at University College London.

It looked at how children's performance in tests changed after the EITC programme was changed to make it more generous to poor families.

Previous studies on the relationship between income and educational achievement have failed to come to a consensus because it has proved difficult to untangle the adverse effects of a child's home environment - such as having poorly educated parents - from the income effect. The methodology of this latest study enabled researchers to study the effects of increasing family income while keeping all other aspects of family life the same.

The research also found that children benefited from the boost to family income whatever their age. This contradicted earlier arguments that help needed to reach children before they started school if it was to have any effect.

"We have no idea what the parents spent the extra money on," Professor Dahl said. "It could be on books, but it could also be because of a reduction of stress in the family. If you know you are going to have an extra $4,000 a year until your child is 18 then it will relieve a lot of the stress that can be a real problem for families in poverty."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Education

Recruitment Genius: Nursery Nurse and Room Leader - Hackney

£15000 - £20000 per annum: Recruitment Genius: Are you a qualified childcare p...

QAA: Independent member of the QAA Board of Directors

Expenses paid in connection with duties: QAA: QAA is inviting applications to ...

AER Teachers: PPA TEACHER/MENTOR

£27000 - £37000 per annum: AER Teachers: THE SCHOOL: This is a large and vibra...

AER Teachers: EYFS Teacher

£27000 - £37000 per annum: AER Teachers: EYFS TEACHERAn 'Outstanding' Primary ...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones