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Do Child Tax Benefits Affect the Wellbeing of Children? Evidence from Canadian Child Benefit Expansions

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  • Kevin Milligan
  • Mark Stabile

Abstract

A vast literature has examined the impact of family income on the health and development outcomes of children. One channel through which increased income may operate is an improvement in a family's ability to provide food, shelter, clothing, books, and other expenditure-related inputs to a child's development. In addition to this channel, many scholars have investigated the relationship between income and the psychological wellbeing of the family. By reducing stress and conflict, more income helps to foster an environment more conducive to healthy child development. In this paper, we exploit changes in child benefits in Canada to study these questions. Importantly, our approach allows us to make stronger causal inferences than has been possible with the existing, mostly correlational, evidence. Using variation in child benefits across province, time, and family type, we study outcomes spanning test scores, mental health, physical health, and deprivation measures. The findings suggest that child benefit programs in Canada had significant positive effects on test scores, as has been featured in the existing literature. However, we also find that several measures of both child and maternal mental health and well-being show marked improvement with higher child benefits. We find strong and interesting differences in the effects of benefits by sex of the child: benefits have stronger effects on educational outcomes and physical health for boys, and on mental health outcomes for girls.

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Bibliographic Info

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Public Economics Programme Discussion Papers with number 01.

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Date of creation: May 2010
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Handle: RePEc:cep:stippp:01

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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

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Keywords: wellbeing; child tax; child benefits; health outcomes;

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References

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  1. Janet Currie & Mark Stabile, 2004. "Child Mental Health and Human Capital Accumulation: The Case of ADHD," NBER Working Papers 10435, National Bureau of Economic Research, Inc.
  2. Gordon Dahl & Lance Lochner, 2008. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit," NBER Working Papers 14599, National Bureau of Economic Research, Inc.
  3. Janet Currie & Mark Stabile & Phongsack Manivong & Leslie L. Roos, 2008. "Child Health and Young Adult Outcomes," NBER Working Papers 14482, National Bureau of Economic Research, Inc.
  4. Currie, Janet & Gruber, Jonathan, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 431-66, May.
  5. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2005. "The Intergenerational Effect of Worker Displacement," NBER Working Papers 11587, National Bureau of Economic Research, Inc.
  6. Michael Anderson, 2005. "Uncovering Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects," HEW 0509008, EconWPA, revised 26 Sep 2005.
  7. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
  8. Joshua Angrist & Daniel Lang & Philip Oreopoulos, 2006. "Lead Them to Water and Pay Them to Drink: An Experiment with Services and Incentives for College Achievement," NBER Working Papers 12790, National Bureau of Economic Research, Inc.
  9. Anderson, Michael L., 2008. "Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects," Journal of the American Statistical Association, American Statistical Association, vol. 103(484), pages 1481-1495.
  10. Philip Oreopoulos & Daniel Lang & Joshua Angrist, 2009. "Incentives and Services for College Achievement: Evidence from a Randomized Trial," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 136-63, January.
  11. Patricia M. Anderson & Kristin F. Butcher & Diane Whitmore Schanzenbach, 2007. "Childhood Disadvantage and Obesity: Is Nurture Trumping Nature?," NBER Working Papers 13479, National Bureau of Economic Research, Inc.
  12. Michael Baker & Jonathan Gruber & Kevin Milligan, 2006. "Universal Childcare, Maternal Labor Supply, and Family Well-Being," Working Papers id:547, eSocialSciences.
  13. Dynarski, Susan, 2005. "Building the Stock of College-Educated Labor," Working Paper Series rwp05-050, Harvard University, John F. Kennedy School of Government.
  14. Milligan, Kevin & Stabile, Mark, 2007. "The integration of child tax credits and welfare: Evidence from the Canadian National Child Benefit program," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 305-326, February.
  15. Kevin Milligan, 2005. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 539-555, August.
  16. Martin Dooley & Jennifer Stewart, 2004. "Family income and child outcomes in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 898-917, November.
  17. David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
  18. Robert Haveman & Barbara Wolfe, 1995. "The Determinants of Children's Attainments: A Review of Methods and Findings," Journal of Economic Literature, American Economic Association, vol. 33(4), pages 1829-1878, December.
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