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Bonus Skills: Examining the Effect of an Unconditional Cash Transfer on Child Human Capital Formation

Author

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  • Gaitz, Jason

    (University of Sydney)

  • Schurer, Stefanie

    (University of Sydney)

Abstract

This paper evaluates the impact of the Australian Baby Bonus – a $3000 one-off cash transfer – on various aspects of child human capital development. Using high-quality longitudinal cohort data and difference-in-difference models, we compare the outcomes of cohort members whose younger sibling was born marginally on either side of July 1, 2004, when the Baby Bonus was introduced. Our results suggest that the Baby Bonus was not effective in boosting learning, socio-emotional or physical health outcomes of the average pre-school child. This finding is strengthened by the observation that the Baby Bonus did not impact parental well-being, parental behavior and labor supply, the potential mechanisms via which the cash transfer could have affected human capital formation. The muted effect for the Baby Bonus in comparison to significant effects for similar cash handouts in other countries may be explained by its non-targeted and one-off structure. We conclude that the large financial cost of $3000 per child is not justified as an intervention for the entire population to boost children's skills.

Suggested Citation

  • Gaitz, Jason & Schurer, Stefanie, 2017. "Bonus Skills: Examining the Effect of an Unconditional Cash Transfer on Child Human Capital Formation," IZA Discussion Papers 10525, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10525
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    Cited by:

    1. Engel, Katherine & Marcotte, Dave E., 2024. "Baby bump? Birth month, family income, and early childhood development," Economics & Human Biology, Elsevier, vol. 54(C).
    2. Alex Proshin, 2020. "Impact of Child Subsidies on Child Health, Well-being and Parental Investment in Human Capital: Evidence from Russian Longitudinal Monitoring Survey 2011-2017," PSE Working Papers halshs-02652268, HAL.
    3. Lebihan, Laetitia & Mao Takongmo, Charles-Olivier, 2018. "The impact of universal child benefits on family health and behaviours," Research in Economics, Elsevier, vol. 72(4), pages 415-427.
    4. Lynch, John & Meunier, Aurélie & Pilkington, Rhiannon & Schurer, Stefanie, 2019. "Baby Bonuses and Early-Life Health Outcomes: Using Regression Discontinuity to Evaluate the Causal Impact of an Unconditional Cash Transfer," IZA Discussion Papers 12230, Institute of Labor Economics (IZA).
    5. Schurer, Stefanie & Trajkovski, Kristian & Hariharan, Tara, 2019. "Understanding the mechanisms through which adverse childhood experiences affect lifetime economic outcomes," Labour Economics, Elsevier, vol. 61(C).
    6. Wang, Julia Shu-Huah & Zhang, Jinbao & Fu, Tsung-Hsi, 2021. "The effects of universal child allowance on family expenditure in Taiwan," Children and Youth Services Review, Elsevier, vol. 129(C).
    7. Lisa A. Gennetian & Greg Duncan & Nathan A. Fox & Katherine Magnuson & Sarah Halpern-Meekin & Kimberly G. Noble & Hirokazu Yoshikawa, 2022. "Unconditional Cash and Family Investments in Infants: Evidence from a Large-Scale Cash Transfer Experiment in the U.S," NBER Working Papers 30379, National Bureau of Economic Research, Inc.
    8. de Gendre, Alexandra & Lynch, John & Meunier, Aurélie & Pilkington, Rhiannon & Schurer, Stefanie, 2021. "Child Health and Parental Responses to an Unconditional Cash Transfer at Birth," IZA Discussion Papers 14693, Institute of Labor Economics (IZA).
    9. Alex Proshin, 2020. "Impact of Child Subsidies on Child Health, Well-being and Parental Investment in Human Capital: Evidence from Russian Longitudinal Monitoring Survey 2011-2017," Working Papers halshs-02652268, HAL.
    10. Alex Proshin, 2023. "Impact of Child Subsidies on Child Health, Well-Being, and Investment in Child Human Capital: Evidence from Russian Longitudinal Monitoring Survey 2010–2017," European Journal of Population, Springer;European Association for Population Studies, vol. 39(1), pages 1-92, December.
    11. Sergi Sánchez-Coll, 2023. "Born this way: the effect of an unexpected child benefit at birth on longer-term educational outcomes," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 14(1), pages 105-141, March.

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    More about this item

    Keywords

    cash transfers; Baby Bonus; cognitive and non-cognitive skills; health; LSAC;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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