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Who benefits from child benefit?

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Download GearyWp200716.pdf287.07 KB
Author(s)
Blow, Laura 
Walker, Ian 
Zhu, Yu 
Uri
http://hdl.handle.net/10197/1834
Date Issued
08 June 2007
Date Available
08T14:31:27Z February 2010
Abstract
Governments, over much of the developed world, make significant financial transfers to parents with dependent children. For example, in the US the recently introduced Child Tax Credit (CTC), which goes to almost all children, costs almost $1billion each week, or about 0.4% of GNP. The UK has even more generous transfers and spends about $25 a week on each of about 8 million children – about 1% of GNP. The typical rationale given for these transfers is that they are good for our children and here we investigate the effect of such transfers on household spending patterns. The UK is an excellent laboratory to address this issue because such transfers, known as Child Benefit (CB) have been simple lump sum universal payments for a continuous period of more than 20 years. We do indeed find that CB is spent differently from other income – paradoxically, it appears to be spent disproportionately on adult-assignable goods. In fact we estimate that as much as half of a marginal pound of CB is spent on alcohol. We resolve this puzzle by showing that the effect is confined to unanticipated variation in CB so we infer that parents are sufficiently altruistic towards their children that they completely insure them against shocks.
Sponsorship
Her Majesty's Treasury's Evidence Based Policy Fund
Type of Material
Working Paper
Publisher
University College Dublin. Geary Institute
Series
UCD Geary Institute Discussion Paper Series
WP/16/2007
Keywords
  • Altruism

  • Child poverty

  • Intra-household trans...

Classification
I38
D79
D12
Subject – LCSH
Family allowances
Child welfare
Transfer payments
Households--Economic aspects
Web versions
http://www.ucd.ie/geary/static/publications/workingpapers/GearyWp200716.pdf
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
https://creativecommons.org/licenses/by-nc-sa/1.0/
Owning collection
Geary Institute Working Papers
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