Baby Bonuses and Early-Life Health Outcomes: Using Regression Discontinuity to Evaluate the Causal Impact of an Unconditional Cash Transfer

Abstract

We use administrative data from South Australia to study the impact of an unconditional cash transfer on child health. We use the unanticipated introduction of the Australian Baby Bonus (ABB), a one-off payment of AU$3,000 (US$2,400) made to families with a newborn, to isolate its causal effect. The ABB reduces the number of potentially preventable hospitalizations and emergency department presentations for respiratory problems in the first year of life. Findings from survey data suggest that households spent the windfall income on electricity and private health insurance. There is no robust evidence that the ABB increased accidents or non-essential good consumption.

Keywords: unconditional cash transfers, baby bonus, child respiratory health, health care utilization, regression discontinuity design, natural experiment, linked administrative data

JEL Classification: I14, I38