Universal Child Benefit Research Articles

Welfare and economic implications of universal child benefits

Universal child benefits are an important component of the social protection systems in many developed economies, particularly in Europe. When evaluating their impact, most studies tend to focus primarily on the empirical evidence and short-term effects. However, given their large-scale implementation, such programs can have sizable general equilibrium effects. The aim of this paper is to study the long-run implications of universal child benefits within a theoretical framework that can capture the complexities of household decisions regarding consumption, labor participation, and the timing of children. To this end, I develop an overlapping generations model with idiosyncratic earnings risk, infertility shocks, and endogenous temporal fertility. According to the model simulations, universal child benefits lead to a reduction in the spacing between children and, on average, lower maternal age at childbirth for all births. This, in turn, alleviates some of the negative aggregate effects typically associated with redistributive policies, but has a detrimental impact on the average quality of children. Finally, universal child benefits increase ex-ante welfare by 0.42% of lifetime adult consumption, significantly outperforming broad-based transfer policies not tied to the number of children.

How do right‐wing populist majoritarian governments redistribute? Evidence from Poland, 2005–2019

AbstractThere is scarce evidence regarding redistribution policies implemented by right‐wing populist parties forming majority governments. We contribute to this literature by measuring the effects of sweeping reforms of the tax and benefit system carried out by the populist party PiS governing Poland since 2015. The reforms included a generous, unconditional, and universal child benefit. Using micro‐simulation‐based decompositions of relative poverty, we separate poverty changes due to the populists' policies (policy effects) from observed poverty changes. We found that populists' reforms from 2015 to 2019 had large poverty‐reducing effects: total poverty was brought down by more than 2 percentage points, while child poverty by about 6.5 points. However, the policy effects account ‘only’ for about half of overall poverty declines over this period. On the other hand, they are much bigger than those obtained previously by a coalition of mainstream parties (2007–2011) or a coalition of populist ones (2005–2007). Since 2015, the populists' reforms targeted social groups that were neglected or inadequately addressed by anti‐poverty policies by past governments. Our results suggest that, at least in conservative and ethnically homogeneous societies, right‐wing populist majoritarian governments are capable of carrying out large‐scale redistribution projects that lead to sizeable poverty reductions and include non‐chauvinist, universal cash transfers.

Welfare conditionality and policy contingencies of school‐allowance retractions in Sweden

AbstractThe article analyses policy contingencies and welfare conditionality of school allowances in Swedish upper‐secondary education. In contrast to most countries' use of positive incentives toward school attendance through added cash‐benefits for targeted students, Sweden employs sanctions on a universal study allowance that in essence constitutes an age‐extension of the universal child benefit. We analyse register data from 2012 to 2018 and find significant discrepancies in required school‐reporting when controlling for school populations and key official school‐parameters. These results indicate that negative conditioning through sanctions constitutes an often‐forfeited measure against the rather complex interplay of factors driving truancy, while enforcement of conditionality seems largely contingent upon schools' different reporting strategies and processes. We identify a set of veto points whereby school officials may opt not to enforce conditionality, and further problematize additional findings that the overwhelming majority of students with retracted allowances fail to return to school and complete their educational cycles on time. Our findings contribute to ongoing research on welfare conditionality, hitherto largely dominated by studies on labour market activation policies and social services.

Alternatives to Paying Child Benefit to the Rich: Means‐Testing or Higher Tax?

AbstractThere appears to be a general movement away from universal child benefits and towards means‐testing. In the present article we argue that instead of suppressing the labour supply of middle‐income parents by withdrawing the transfer as a function of income, one should consider the alternative of financing a generous universal child benefit by increasing taxation of income. The implications of means‐testing compared with a tax‐financed universal alternative are discussed analytically in a piecewise linear schedule and by combining information from behavioural and non‐behavioural micro‐simulation models. Our results provide support for making child benefit universal instead of means‐tested.

Effect of child benefit payments on child outcome expenditures in South Korea

AbstractExtensive research has shown the positive impact of conditional child benefits on child outcomes. However, there is limited work on the impact of universal child benefit payments on how families spend on child outcomes. Our study explores this issue. This study examined the relationship between child benefit payments on child outcome expenditures using longitudinal data from the Korean National Survey of Tax and Benefit (N = 3681 households) and a household‐ and year‐fixed effects regression model. We found that child benefit payments are positively associated with child outcome expenditures across family income groups. Furthermore, the analysis results suggest that compared to high‐income family groups, low‐ and middle‐income family groups increase spending on child outcome expenditures in response to child benefit payments. Finally, the policy implications of this are discussed.

The infant health effects of starting universal child benefits in pregnancy: Evidence from England and Wales

Child benefits are typically paid from birth. This paper asks whether starting universal child benefits in pregnancy leads to improvements in infant health. Leveraging administrative birth registry and hospital microdata from England and Wales, I study the effects of the Health in Pregnancy Grant, a universal conditional cash transfer equivalent to three months of child benefit (190 GBP) as a lump sum to pregnant mothers from 2009 to 2011. I exploit quasi-experimental variation in eligibility with a regression discontinuity design in the date of birth of the baby. I find that the policy increased birth weight by 8–12 grams on average, reduced low birth weight (<2500 g) by 3-6 percent and decreased prematurity by 9–11 percent. Younger mothers, particularly those living in deprived areas, benefit the most. I present evidence that the mechanisms are unlikely to be antenatal care, nutrition or smoking, with reductions in stress remaining a possible explanation.

The causal mechanisms behind expansive basic universalism in Kosovo

The majority of Kosovo’s public social welfare provision is today spent on basic universal programmes, namely, old-age pensions, healthcare services and child benefits. These programmes are tax-financed, citizenship-based and unconditional with regard to other criteria. Such expansive basic universalism is unusual for the Western Balkans and the rest of post-socialist Southeastern Europe. The first two of these programmes emerged through a complex process of policy formation led by powerful international organisations (IOs). The third programme was more recently initiated by the first-ever left-wing majority that came to power after two decades of democratic elections, implementing a manifesto that endorses a progressive policy mix. This outcome is counterintuitive: the IOs would be naturally expected to lean towards means-tested, targeted programmes, and Kosovo to crystallise into a (neo)liberal welfare regime (path-dependency). The article examines the detailed causal mechanisms that intervened in producing the outcome. Basic universalism has already had a significant impact in Kosovo by contributing to poverty reduction, the size of overall social protection expenditure and citizenship-building, and by serving as a good policy standard.

Cash transfers before pregnancy and infant health

We estimate the impact of a cash transfer targeting new mothers on their subsequent children's health outcomes at birth. We exploit the unexpected introduction of a generous, universal child benefit in Spain in 2007. Using population-wide, individual-level, high-quality administrative data from birth records and a regression discontinuity approach, we find that women who received the benefit were much less likely to have low-birth-weight children in the future (while their subsequent fertility was unaffected). The overall effect is driven by poor women, unmarried women, and women with low education, and by births taking place relatively soon after the benefit receipt. The €2500 transfer led to a 0.7 percentage-point decline in the fraction of children born under 1500 g in poorer households in the following five years, an 83% reduction. We explore the underlying channels, and find evidence supporting faster intrauterine growth, possibly driven by better maternal health, nutrition, and behaviors. Gestation length, family structure, and parental employment do not seem to play a role. Recent research suggests that targeting pregnant women may be more effective than later interventions (such as cash transfers to families with children), given the strong persistence of fetal health effects. Our results suggest that the impact may be stronger if women are targeted even earlier, before conception.

Cash Transfers and Fertility

We study the effects of a universal child benefit on fertility, identifying separately the effects driven by conceptions and abortions. We focus on a generous lump-sum maternity allowance that was introduced in Spain in 2007 and cancelled in 2010. Using administrative, population-level data, we create a panel data set of the 50 Spanish provinces, with monthly data on birth and abortion rates between 2000 and 2017. Our identification is based on the timing of the introduction and cancellation of the policy (both its announcement and implementation), from which we infer when the effects on abortions and births can be expected. We find that the introduction of the policy led to a 3% increase in birth rates, due to both a decrease in abortions and an increase in conceptions. The announcement of the cancellation of the policy led to a transitory increase in birth rates of 4% just before the cancellation was implemented, driven by a short-term drop in abortions. The cancellation then led to a 6% drop in birth rates. Heterogeneity analysis suggests that the positive fertility effect of the benefit introduction was driven by high-skilled parents, while the negative impact of the cancellation was larger among low-skilled and out-of-labor-force parents, and in lower income, higher unemployment regions. We also find suggestive evidence that the child benefit had both a timing effect (“tempo†), so that some women had children earlier, and a level effect (“quantum†), where some women had more children than they would have had otherwise.

Does the Universal child benefit change household consumption expenditure among families with children in Korea?

Does the Universal child benefit change household consumption expenditure among families with children in Korea?

Alternatives to Paying Child Benefit to the Rich: Means Testing or Higher Tax?

Transferring public benefits to people in no need of them appears to be a waste of public money. Thus, there seems to be support for a move away from universal child benefits and towards means testing. This study presents a critique of this overly-simplistic view and proposes a very simple alternative: instead of withdrawing the transfer as a function of income, which raises marginal tax rates for low and middle income parents, with accompanying detrimental effects on labour supply, redistribution can be achieved by an ambitious universal schedule financed by increased income taxation of the rich. The role of the child benefit is discussed analytically in a piecewise linear schedule. Moreover, the argument is illustrated with reference to the design of the child benefit scheme for Norway, demonstrating the labour supply/redistribution trade-offs of the alternatives by results from simulation models.

The impact of universal child benefits on family health and behaviours

In 2006, the Universal Child Care Benefit was introduced in Canada for all children aged less than 6 years. This program aims to help cover the cost of children and to provide financial assistance to families with young children in their choice of childcare. We exploit this policy change to estimate the effects of unconditional family cash transfers on the health and behaviours of two-parent families and their children. Using a difference-in-differences model, we find no evidence that the program improved child and parental outcomes in aggregate. A modest but fragile beneficial effect is found for low-education families and for girls.

Cash transfers for families and children in Argentina, Brazil and Chile: segmented expansion or universal benefits?

AbstractOver the past two decades, most Latin American countries have developed cash transfer programmes for poor and low income families not covered by the social security system. These programmes now benefit about 127 million people throughout Latin America and in some countries they include more children than the family allowances of the social insurance system. How have these innovations changed the structure of child benefits in Latin America? This article discusses this issue by looking at the experiences of Argentina, Brazil, and Chile. In these three countries, a wide-ranging programme of non-contributory cash transfers for low income families now operates alongside a pre-existing scheme of family allowances for formal sector workers. This has contributed to expand coverage of cash benefits for families and children, while at the same time keeping a segmented benefit structure. In contrast, a universal child benefit could overcome this segmentation and guarantee equal rights to all children.

Cash for Kids

Although a growing number of studies suggest that providing poor families with income supplements of as little as $1,000 per year will improve children’s well-being, many poor children miss important sources of income support provided through the tax system because their parents either do not work or do not file taxes. Accessing assistance through means-tested programs is also challenging. We propose replacing the complicated array of benefits provided through the tax system with a universal child benefit of $2,000 per child that would be available regardless of parents’ work status. Our reform would ensure that all children receive enough assistance to make a difference and it would be simpler and more equitable than the current array of child benefits that are provided through the tax code.

The Effects of Large Universal Child Benefits on Female Labour Supply

In 2016 the Polish government introduced a large new child benefit, called Family 500+, with the aim to increase fertility from a low level and reduce child poverty. The benefit is universal for the second and every further child and means-tested for the first child. Increasing out-of-work income significantly, the transfer can reduce incentives to participate in the labour market. We study the impact of the new benefit on female labour supply, using Polish Labour Force Survey data. Based on a difference-in-differences methodology we find that the labour market participation rates of women with children decreased after the introduction of the benefit compared to childless women. The estimates suggest that by mid-2017 the labour force participation rate of mothers dropped by 2-3 percentage points, depending on the estimation specification, as a result of the Family 500+ benefit. The effect was higher among women with lower levels of education and living in small towns.

The Impact of Universal Child Benefits on Family Health and Behaviours

In 2006, the Universal Child Care Benefit was introduced in Canada for all children aged less than 6 years. This program aims to help cover the cost of children and to provide financial assistance to families with young children in their choice of childcare. We exploit this policy change to estimate the effects of unconditional family cash transfers on the health and behaviours of two-parent families and their children. Using a difference-in-differences model, we find no evidence that the program improved child and parental outcomes in aggregate. A modest but fragile beneficial effect is found for low-education families and for girls.

Distributional impacts of cash allowances for children: A microsimulation analysis for Russia and Europe

This article analyses programmes of cash allowances for children and compares their effectiveness in combating child poverty in Russia and four European Union (EU) countries representing alternative family policy models – Sweden, Germany, Belgium and the United Kingdom. Using microsimulation models, this article estimates the potential gains if the Russian system were re-designed along the policy parameters of these countries and vice versa. The results confirm that the poverty impact of the programme design is smaller than that of the level of spending. Other conditions being equal, the best distributional outcomes for children are achieved by applying the mix of universal and means-tested child benefits, such as those employed by the United Kingdom and Belgium. At the same time, the Russian design of child allowances does not appear to be less effective in terms of its impact on child poverty when transferred to European countries in place of their current arrangements.

The Differential Impact of Universal Child Benefits on the Labour Supply of Married and Single Mothers

We examine the effects of the Universal Child Care Benefit on the labour supply of mothers. The benefit has a significant negative effect on the labour supply of legally married mothers, reducing their likelihood of participation in the labour force by 1.4 percentage points and hours worked by nearly one hour per week. In contrast, the likelihood of participation by divorced mothers rises by 2.8 percentage points when receiving the benefit and does not affect hours worked. Moreover, the benefit does not have a statistically significant effect on the participation of common-law married mothers or never-married mothers.

Using mobile technologies for immunization: Predictors of uptake of a pan-Canadian immunization app (ImmunizeCA).

Substandard vaccination compliance in many areas of North America has resulted in outbreaks of vaccine-preventable diseases such as measles (1). Mobile technologies offer an opportunity for public health to improve vaccination rates by providing accurate information and reminding individuals of immunization appointments (2). However, mobile apps are limited by the willingness of the public to download them. ImmunizeCA is a pan-Canadian immunization app, which provides users with a mechanism to store their family’s immunization records, access accurate immunization information, schedule appointments and be notified of vaccine-preventable diseases in their vicinity. We sought to measure uptake and use of ImmunizeCA over a six-month period, and to assess the effectiveness of various promotional strategies in driving uptake and use of the app (Table 1). Strategies examined included: government and hospital press releases, Apple (Apple Inc, USA) App Store placement in “Best New Apps” section at launch, direct-to-household flyers enclosed in federal universal child benefit cheques (flyers), as well as online and print news articles and mentions in social media (Twitter [Twitter Inc, USA] and Facebook [Facebook Inc, USA]). TABLE 1 Period of investigation and critical events during the study period March 20 to September 20, 2014

The effect of universal child benefits on labour supply

AbstractUsing a difference‐in‐differences estimator, I find the Canadian Universal Child Care Benefit has significant negative income effects on the labour supply of married individuals. The likelihood of lower‐educated mothers to participate in the labour force is reduced 3.2 percentage points when receiving the benefit. Median hours worked per week among lower‐educated mothers is reduced by 1.9 hours. The effects on higher‐educated mothers are substantial, with median hours worked among higher‐educated mothers reduced by nearly one hour per week. For men, the evidence suggests small but significant income effects on labour supply, consistent with the literature on labour supply elasticities.