Money or Time? Heterogeneous Effects of Unconditional Cash on Parental Investments

Household time and money allocations in response to income support programs vary across diverse family circumstances and preferences, yet such heterogeneous responses are not well understood. Using data from a large-scale, multisite, U.S.-based randomized controlled study, we examine heterogeneity in the effects of a monthly unconditional cash transfer on monetary and time investments in children. This study offers a novel opportunity to examine heterogeneous effects of a cash transfer by race and ethnicity, where receipt is independent of eligibility based on other demographic characteristics. The effects of the cash transfer on net household income, earnings, and household expenditures were similar for families irrespective of race or ethnicity, even given initial differences in family structure, government benefit receipt, and employment. However, effects on monetary and time investments in children differed. Latino families’ child-focused expenditures increased, equivalent to nearly one-third of the cash transfer, with no effect on maternal employment or time spent with children. Among Black families, maternal work hours decreased and time spent with children on early learning activities increased, with no effect on child-focused expenditures. Marginal propensities to consume child-specific goods from different income sources also varied: Estimates showed a higher marginal propensity to consume child-specific goods from government income than from maternal income among Latino families, and the opposite among Black families. Latino families’ responses to the unconditional cash transfer and to government income are consistent with the notion that signals regarding intended use of income influence spending decisions.