Child Cash Benefits and Family Expenditures: Evidence from the National Child Benefit

41 Pages Posted: 20 Apr 2015 Last revised: 27 Feb 2022

See all articles by Lauren Eden Jones

Lauren Eden Jones

The Ohio State University

Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Mark Stabile

INSEAD; National Bureau of Economic Research (NBER)

Date Written: April 2015

Abstract

A vast literature has examined the impact of family income on the health and development outcomes of children. Income may improve child outcomes through two mechanisms. First, income may improve development outcomes if it improves a family’s ability to purchase direct inputs into child education and health production such as reading material, educational equipment, and health care. Second, by reducing stress and conflict, additional income helps to foster an environment more conducive to healthy child development, regardless of the nature of specific expenditures. In this paper, we exploit changes in refundable tax benefit income in Canada to study these questions. Importantly, our approach allows us to make stronger causal inferences than has been possible in existing studies. Using variation in child benefits across province, time, and family type, we study expenditure patterns of families receiving child benefits. Our findings suggest that additional income may improve outcomes through both mechanisms: some benefit income is spent on direct education and health inputs, while some is spent on everyday items likely to improve the general conditions children face. Additionally, some families reduce spending on risky behavior items. Spending responses to benefit generosity appear to vary by income.

Suggested Citation

Jones, Lauren Eden and Milligan, Kevin S. and Stabile, Mark, Child Cash Benefits and Family Expenditures: Evidence from the National Child Benefit (April 2015). NBER Working Paper No. w21101, Available at SSRN: https://ssrn.com/abstract=2596430

Lauren Eden Jones (Contact Author)

The Ohio State University ( email )

1787 Neil Avenue
Columbus, OH 43210
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Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics ( email )

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Vancouver, BC V6T 1Z1
Canada

National Bureau of Economic Research (NBER)

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United States

Mark Stabile

INSEAD ( email )

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F-77305 Fontainebleau Cedex
France

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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