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The Impact of the German Child Benefit on Household Expenditures and Consumption

Author

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  • Raschke Christian

    (Sam Houston State University, 1905 University Ave, Huntsville, United States of America)

Abstract

The German Child Benefit (‘Kindergeld’) is paid to legal guardians of children as a cash benefit. The benefit does not depend on household income or other household characteristics. I use exogenous variations in the amount of child benefit received by households in the German Socio-Economic Panel to estimate the impact of a given change in the child benefit on food expenditures of households, the probability of owning a home, rent per square meter, measures of the size of the home, as well as parents’ smoking behavior and parents’ alcohol consumption. Households primarily increase per capita food expenditures in response to increases in child benefit, and they also improve housing conditions. The effect of child benefit on per capita food expenditures is larger for low-income households compared to high-income households. I do not find a significant effect of child benefit on parents’ smoking or drinking.

Suggested Citation

  • Raschke Christian, 2016. "The Impact of the German Child Benefit on Household Expenditures and Consumption," German Economic Review, De Gruyter, vol. 17(4), pages 438-477, December.
    • Handle: RePEc:bpj:germec:v:17:y:2016:i:4:p:438-477
    DOI: 10.1111/geer.12079
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