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The three countries chosen for the analysis are similarly affluent, but have in place quite different programmes for children. For example, social spending is much higher in Norway than in Canada, though social spending is higher in Canada than in the U.S. A larger proportion of healthcare is publicly funded in Norway than in Canada, though a much higher proportion of healthcare is publicly funded in Canada than in the U.S. Unemployment rates are much the highest in Canada, as are levels of immigration. There is also significant variation in these measures across regions within Canada or the U.S. Results provide support for the hypothesis that policy matters for children in ways which cannot entirely be captured through standard micro-level variables. However, it is hard to pin down their associations.

The study answers these questions with data drawn from the share file of the first two cycles (1994-1995 and 1996-1997) of the National Longitudinal Survey of Children and Youth (NLSCY). The researchers use cross-tabular analysis to observe the correlation between families' changing economic circumstances and children's developmental outcomes. Our results show the distribution of household income in each of the two cycles to be generally the same. This equivalence, however, hides broad income shifts that are correlated with changes in family structure and number of earners.

The analysis then proceeds to investigate the independent effect of income on child outcomes employing a typical reduced-form Ordinary Least Squares (OLS) regression model following Blau (1999) and Mayer (1997). The results demonstrate that the effect of income on children's behavioural and cognitive outcomes is for the most part significant, even after the application of controls, but is relatively small. This finding concurs with much of the previous research. Research literature has shown that income may affect children through their home environment. The authors construct a home- environment index, which is a preliminary proxy of the HOME psychometric scale measure used in previous American research. With this index, children from affluent families are shown to tend to have slightly better and more stimulating home environments than children from families with lower income. The study concludes that, with only the two cycles of the NLSCY, one cannot yet determine the exact nature of the income and child-development link. The findings support the notion that the impact of income on children's development is weak to moderate for many of the child outcomes examined. However, the findings also suggest that, through a variety of variables, income does have an impact on children's development.