Bonus Skills: Examining the Effect of an Unconditional Cash Transfer on Child Human Capital Formation

Jason Gaitz and Stefanie Schurer
Additional contact information
Jason Gaitz: University of Sydney

No 10525, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper evaluates the impact of the Australian Baby Bonus – a $3000 one-off cash transfer – on various aspects of child human capital development. Using high-quality longitudinal cohort data and difference-in-difference models, we compare the outcomes of cohort members whose younger sibling was born marginally on either side of July 1, 2004, when the Baby Bonus was introduced. Our results suggest that the Baby Bonus was not effective in boosting learning, socio-emotional or physical health outcomes of the average pre-school child. This finding is strengthened by the observation that the Baby Bonus did not impact parental well-being, parental behavior and labor supply, the potential mechanisms via which the cash transfer could have affected human capital formation. The muted effect for the Baby Bonus in comparison to significant effects for similar cash handouts in other countries may be explained by its non-targeted and one-off structure. We conclude that the large financial cost of $3000 per child is not justified as an intervention for the entire population to boost children's skills.

Keywords: cash transfers; Baby Bonus; cognitive and non-cognitive skills; health; LSAC (search for similar items in EconPapers)
JEL-codes: H53 J24 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2017-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://docs.iza.org/dp10525.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp10525

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().