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

  • Kevin Milligan
  • Mark Stabile

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. Our findings also provide some support for the hypothesis that income transfers operate through measures of family emotional well-being.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14624.

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Date of creation: Dec 2008
Date of revision:
Publication status: published as Kevin Milligan & Mark Stabile, 2011. "Do Child Tax Benefits Affect the Well-Being of Children? Evidence from Canadian Child Benefit Expansions," American Economic Journal: Economic Policy, American Economic Association, vol. 3(3), pages 175-205, August.
Handle: RePEc:nbr:nberwo:14624
Note: CH HC HE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. 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.
  2. 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.
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  13. 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.
  14. 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.
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  17. 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.
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  21. 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.
  22. Janet Currie & Mark Stabile, 2009. "Appendix to "Mental Health in Childhood and Human Capital"," NBER Chapters, in: The Problems of Disadvantaged Youth: An Economic Perspective National Bureau of Economic Research, Inc.
  23. Robert A. Moffitt, 2003. "Means-Tested Transfer Programs in the United States," NBER Books, National Bureau of Economic Research, Inc, number moff03-1, July.
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