Detection of amplitude modulations (AM) improves until 10 years of age. This development may not be explained only by sensory maturation but also by improvements in processing efficiency: the ability to make efficient use of available sensory information. This hypothesis was tested on 86 6-to-9-year-olds and 15 adults using AM-detection tasks assessing sensitivity, masking and response consistency. Sensitivity was estimated by the detection thresholds of a sinusoidal AM applied to a pure-tone carrier; AM masking was estimated as threshold elevation produced when replacing the pure-tone carrier by a narrowband noise; response consistency was estimated using a double-pass paradigm where the same set of stimuli was presented twice. Results showed that AM sensitivity improved from childhood to adulthood. AM masking did not change with age, indicating that the selectivity of AM filters was adult-like by 6 years. However, response consistency increased developmentally, suggesting reduced processing efficiency in childhood. At the group level, double-pass data were well simulated by a model of the auditory system assuming higher internal noise for children than adults. At the individual level, a sub-optimal decision strategy was added to better capture inter-individual variability. Thus, both systematic and stochastic inefficiencies may explain worse AM detection in childhood.