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A long-standing concern has discussed the effect of parental migration on children development. The empirical evidence has supported the theorized negative effect on educational outcomes. We propose two mechanisms explaining the effect of parental migration on children’s cognitive skills. First, parental migration will increase the amount of remittance the child received, and the increased economic resource will have a positive effect on children’s cognitive skills. And second, the interaction between children and the prime caregiver (pcg-child interaction). Parental migration leads to the situation that the child cannot be looked after by both parents. When the child is cared by only one parent or other relatives, the interaction between the caregiver and the child would be less. The decrease in interaction results in the disadvantage in children’s cognitive skills. In order to make a casual claim, we include an instrumental variable into the structural equation model. Based on the unique data from rural China, we find the negative effect of parental migration is mediated by pcg-child interaction. But the mechanism of remittance isn’t supported by our data.