The effects of universal child allowance on family expenditure in Taiwan

Abstract

Current research regarding universal child allowance (UCA) programs has largely been undertaken in Western contexts, where family culture and societal norms differ significantly from Asian contexts. The UCA program implemented in Taoyuan, Taiwan in 2015 offers a unique opportunity to study its effects on family expenditure. All families with children aged under three years are eligible to receive a monthly UCA of 3000 New Taiwan Dollar (NTD). We used representative data from the Survey of Family Income and Expenditure (2011–2017) to examine the effects of UCA on household consumption and non-consumption expenditure categories using a difference-in-difference (DD) design. The DD design allows us to compare differences in outcomes before and after the policy change in Taoyuan and other counties in Taiwan. We used ordinary least squares models to estimate the policy effects and controlled for households and county characteristics, and county and year fixed effects. Our findings suggest that the UCA increased health expenditure, decreased expenditure on food at home, and increased expenditure on red/white envelopes (cash contributions for weddings, funerals, and special occasions). UCA did not influence savings rates or other expenditure categories.