This paper explores (on the basis of available data) the role of various family characteristics in fostering abilities in preschool children and the subsequent effect of ability on earnings. The paper is part of an effort to improve the understanding of the process of human capital development as a basic determinant of earnings. Three specific questions are the focus of this paper: (1) What are the characteristics of individuals that significantly affect earnings, and in particular, what is the particular role of ability in generating economic returns? (2) What factors influence the development of abilities in young children? (3) What has been international experience with intervention programs intended to increase the opportunities for children with disadvantaged backgrounds by enhancing their abilities? It is concluded that household income and the status of the mother are key predictors of abilities of preschool children from disadvantaged backgrounds. The extensive appendix contains comments on P. Taubman's "Sources of Inequality in Earnings" and A. Leibowitz's "Parental Inputs and Children's Achievement"; plus, a description of the Gary Income Maintenance sample data with a detailed exposition of results. Statistical tables are included. (RH)