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Early cognitive development is a crucial indicator of developmental health, as it is associated with later educational and occupational attainment as well as health and wellbeing. 1-7 What happens to children early in their lives is critical for their future development. 8-10 A major risk factor undermining children's cognitive development is family poverty, in particular persistent poverty and adverse living conditions. 8 11-14 In recent years family instability has become recognised as a further salient risk factor affecting children's development. 15-21 Poverty and family instability are closely interlinked, as poverty affects families economically and socially, as well as on an emotional level. Economic hardship, for example, has been associated with a greater risk of relationship break-up. 16 22 While the effects of both poverty and family structure on child development are well established, there is less knowledge about their relative impact on children's outcomes. 23-25
In the following we will assess the relative role of family poverty and family instability on the cognitive functioning of young children. Poverty affects the amount and quality of material resources that are available to children, which in the following we will refer to as the poverty hypothesis. In addition, there is consistent evidence to suggest that children raised in stable two-parent families do better than those who experience multiple transitions in family structure, which has been referred to as the instability hypothesis. 24 25 Because family break-up and the experience of poverty often co-occur, 26 it is important to assess their combined as well as separate effects on children's outcomes. Evidence from previous research on the relationship between poverty, family structure and children's academic attainment has produced conflicting findings, with some arguing that poverty may explain much of the effect of family structure on children's educational achievement, 27-30 whereas others have argued that family structure operates independently of family economic status in influencing children's outcomes. 16 27 31 32 Differences in findings might be due to variations in the ages of the children studied, differences in assessments, or different operationalisations of family structure. In addition, most previous studies have focused on poverty and family structure as states and have not taken into account continuity and change in family circumstances.
An alternative explanation for the association between poverty, family instability...