Background Associations between workplace efforts and rewards and health outcomes suggest that people are sensitive to workplace equity and that inequity damages health. Past research utilising self-reported effort-reward imbalance (ERI) introduces the possible impact of negative affectivity on self-reported health outcomes, weakening this evidence base. The impact of ERI on child health is also unknown. We considered ERI and health using objective ERI measures, defining education and occupation as efforts and income as reward.

Methods We examined ERI and mental and physical health in parents and 3–12 year-old children using longitudinal multilevel models. Data were from the Millennium Cohort Study, sampled from Child Benefit records. ERI was defined as hourly pay of more than one standard deviation above or below the mean for parents’ education and occupational position, using Labour Force Survey earnings data. Outcomes were psychological distress (Kessler scores), self-rated health and pain in parents; Strengths and Difficulties (SDQ) scores and overall health in children.

Results Ordinal self-rated health was worse in parents with occupation-income ERI (OR: 0.837, CI:0.764–0.920) and education-income ERI (OR: 0.807, CI:0.740–0.881), but better where incomes exceeded parents’ occupation (OR: 1.159, CI:1.095–1.226) or education (OR: 1.183, CI:1.113–1.258). Psychological distress was greater in parents with occupation-income ERI (OR: 1.043, CI: 1.011–1.76) but not education-income ERI. Distress was unaffected by ERI where incomes exceeded parents’ occupation or education. Pain was not associated with ERI but the odds of pain were lower where incomes exceeded parents’ occupation (OR: 0.910, CI: 0.835–0.992) or education (OR: 0.849, CI: 0.769–0.937).

Children’s SDQ scores were not associated with ERI. Conversely, SDQ scores were lower – indicating better behaviour – in children whose mother’s income exceeded her occupation (OR: 0.978, CI: 0.956–1.000) or education (OR: 0.952, CI: 0.929–0.976), and whose father’s income exceeded his education (OR: 0.970, CI: 0.949–0.993) but not occupation. Overall health was worse in children of mothers with education-income ERI (OR: 0.842, CI: 0.726–0.975) but not mothers’ occupation-income ERI or father’s ERI. Children’s overall health was conversely better where mother’s incomes exceeded her occupation (OR: 1.151, CI: 1.021–1.298) or education (OR: 1.215, CI: 1.062–1.391) and father’s incomes exceeded his education (OR: 1.131, CI: 1.005–1.273) but not occupation.

 Conclusion Parents who were underpaid relative to their occupation or education reported worse overall and mental health, while overpaid parents reported better health and reduced risk of pain, demonstrating that health is influenced by the type and direction of ERI. In children, ERI was not clearly related to worse health, but physical and mental health were better if parents’ incomes exceeded their occupation or education, suggesting that ERI is not detrimental to children’s health.