The major question addressed in this research is: 'Does maternal employment affect child dietary intake and nutritional status and if so, what mediating factors are important?' Maternal employment has been seen to have two conflicting effects on child nutrition--via increased income and decreased time available in the household. Efficiency and preferences of the household will vary and are likely to be of major importance in these relationships. A comprehensive measure of these inputs was devised using the concept of 'differentiation', defined as the capacity to process a diversity of information types. Various indicators of this concept were identified at both the household and the maternal levels and entered into a principal component analysis which generated composite variables. The data, including weighed dietary intakes and observed time use for mothers and substitutes, were collected during a 1 year stay in Panama. The results of a series of stepwise and multiple regression analyses lead to the conclusion that maternal employment, in this population, has a positive effect on child nutrition. In most cases, employment status enters into interactions with a variety of effect modifiers, suggesting the highly situational aspect of the relationships. Maternal time in home production decreases with her employment but total household time in these activities does not, due to the inputs of other household members. Maternal income seems to be of key importance to dietary intake. The maternal differentiation variable is consistently and positively related to dietary and anthropometric outcomes.(ABSTRACT TRUNCATED AT 250 WORDS)