Child Cash Benefits and Family Expenditures: Evidence from the National Child Benefit Kevin Milligan ~ Vancouver School of Economics ~ University of British Columbia

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

with Lauren E.Jones and Mark Stabile. NBER Working Paper No. 21101
Google Scholar: entry.


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.


NBER Working Paper. (April 2015)
Martin Prosperity Institute Research Summary, April 20, 2015.

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