The term "socioeconomic gradient" is often used to describe the relationships between social outcomes and socioeconomic status (SES) for individuals in a specific community. In research on child development the social outcome is typically a measure describing cognitive ability, health, behaviour, social skills, or personality traits. This paper defines socioeconomic gradients and suggests a standardized method for presenting them. It further sets out ten hypotheses about socioeconomic gradients and community differences, describes the statistical models for testing them, and discusses their implications for social policy. In accomplishing these goals, the following hypotheses are tested using data from two Canadian surveys - the National Longitudinal Survey of Children and Youth (NLSCY) and Understanding the Early Years (UEY): (1) Children's receptive vocabulary is related to parents' SES; (2) Communities vary in children's vocabulary skills even after taking account of individual's SES; (3) The relationship between children's vocabulary skills and SES becomes weaker at higher levels of SES; (4) Variation among communities in children's vocabulary skills decreases with increasing levels of SES; (5) The average level of community SES has an effect on children's vocabulary development over and above the effects associated with individuals' SES; (6) Children from communities of relative homogeneity in SES tend to have better literacy skills than those from communities relatively heterogeneous in SES; (7) Socioeconomic gradients tend to be lower and steeper for low SES children than those for the high-status children; (8) There are independent individual actions as well as communities features attributable to the variation within and among communities in children's vocabulary skills; (9) Successful communities tend to be in close proximity to other successful communities; and (10) the relationships between SES and children developmental outcomes tend to be stable over time. The study finds that, while children's development outcomes, such as early literacy skills, are related to their parents' SES, other family and community factors can have a substantial impact over and above the effects associated with individual's SES. The family and community factors that have proven influential in this study include: the number of siblings, parents' reading to their child, family cohesiveness, social support, and neighbourhood stability. The study also finds that recent immigrant children on average scored substantially lower in vocabulary skills than children whose parents immigrated over five years ago, and further lower than non-immigrant children. Moreover, the study finds that significant differences exist among Canadian communities in the level of children's vocabulary development. The community differences appear to affect all children regardless of their SES levels. However, further research is necessary on why communities differ. For example, it is not known whether low SES children living in a poorer community suffer "double jeopardy", and whether neighboring communities influence each other in literacy and parenting practices. These findings show that it is not possible to identify and focus on a single factor in government's social policy. Rather there are several factors, both at family and community levels, which by themselves appear to have a small effect, but taken together, they can have a substantial effect on children's early development. A bibliography is included. (Contains 4 footnotes, 3 figures and 2 tables.)