There is a well-established positive association between family income and children’s test scores in math and reading. One study found that US children from families in the top 10 percent of the income distribution had test scores approximately one standard deviation higher than children from families in the bottom 10 percent, and this difference has grown in recent decades. Another study found that children in the UK from families in the top 20 percent of the income distribution scored about 0.75 standard deviations higher than those in the bottom 20 percent, and this gap has also widened over time.

While these findings seem to suggest that family income is a powerful determinant of test scores, our research suggests otherwise. We used data on the children of women born between 1957 and 1964 and interviewed as part of the National Longitudinal Survey of Youth in the United States. We plotted the difference in math and reading test scores between children in the top and bottom thirds of the family earnings distribution whose mothers had earned a high school diploma or less. At age 5, the gap in achievement scores is about 0.5 standard deviations, and it grows little between ages 5 (kindergarten) and 13 (eighth grade). If family income were an important determinant of academic achievement during primary school years, then the greater income of families at the top of the income distribution would have caused the scores of the children in these families to grow each year relative to the scores of children in families at the bottom of the income distribution. One possible explanation for the limited widening of the gap between income and achievement is that schools moderate achievement gaps by income. Alternatively, family income may not be an important determinant of academic achievement during these ages, particularly for families at the lower end of the income distribution.

Whether the correlation between income and test scores is a causal association is a question of continuing debate; the answer to this question is important because it shapes the policy recommendations that follow from it. On the one hand, if income is an important factor in educational achievement, then government payments to low-income families during schooling years could reduce educational disparities and intergenerational inequality. On the other hand, if income during schooling years is not a significant factor in educational achievement—and if factors correlated with family income, such as maternal education and school quality, matter more—then payments would be less effective, and other policies focused on these root factors would more effectively reduce educational disparities.

Our research examines the effects of increases in family income due to minimum wage hikes on the test scores of US children born between 1980 and 2000 whose mothers had earned a high school diploma or less. We focused on this group of children because their mothers are most likely to be affected by changes in the minimum wage. Our findings reveal that minimum wage hikes increased family earnings, but the size of the increase differed according to the mother’s potential earnings, predicted by characteristics such as her education, age at her child’s birth, race/​ethnicity, and scores on three tests: the Armed Forces Qualification Test, a self-esteem test, and a test of perceived control over life outcomes. A $1 increase in the minimum wage was associated with increases in family earnings of approximately $1,000–$2,500 among families whose mother had higher earnings potential, but it was associated with smaller increases in earnings—and in some cases, decreases in earnings—among families whose mother had lower earnings potential. Additionally, minimum wage hikes had little effect on the number of hours and weeks mothers worked across the potential earnings distribution. Thus, any effect of minimum wage hikes on academic achievement likely occurred due to increases in family income rather than changes in the time mothers spent working.

However, our research finds that changes in family income induced by minimum wage hikes had little effect on children’s test scores. The largest of our estimates suggests that $1,000 of additional income was associated with an increase of less than 0.01 standard deviations in math and reading test scores. We can rule out increases of more than 0.03 standard deviations, and many of our estimates suggest that additional income had no effect on scores. Prior research demonstrates that when families have more income, their children are more likely to go to college. Our findings indicate that this effect is not driven by gains in cognitive skills but by factors such as parents’ greater ability to cover college costs.

Note
This research brief is based on Dhaval M. Dave et al., “Effects of Family Income on Child Academic Achievement: Evidence from Changes in the Minimum Wage,” Southern Economic Journal, ahead of print, May 15, 2025.