Do high-income households 'label' family cash transfers? Evidence on family expenditures from Australia

Gabriele Mari and Renske Keizer

No ucyzb, SocArXiv from Center for Open Science

Abstract: Naming cash benefits with explicit reference to “families” or “children” can nudge households into labelling the extra cash for child goods and child-oriented savings. Labelling has mainly been assessed among lower-income households. Yet if also higher-income households engage in labelling, family cash benefits may very well help with the costs of raising children, but not mitigate stark disparities in child-related investments along the income distribution. Relatively overlooked, we thus examine the occurrence of labelling among higher-income households. We exploit recent reforms that progressively excluded high-income households from Australia’s main cash provision for families with children, Family Tax Benefit. We use longitudinal data from Household, Income, and Labour Dynamics in Australia (HILDA) and an instrumented difference-in-differences design. We find that, in the absence of reforms, higher-income households would have kept labelling Family Tax Benefit for child goods (clothing), substituting for adult goods (alcohol). Different from lower-income households, those with higher incomes in our sample do not seem to assign family cash benefits to essentials in the home environment. Finally, we find suggestive evidence that higher-income households earmark cash benefits for children’s education fees, not on average, but only when women are the main financial decision-maker in the household. We conclude that expenditure responses, heterogeneous across households, may inform the design of family cash benefits, especially when socioeconomic gaps in family investments are a concern.

Date: 2021-07-31
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:ucyzb

DOI: 10.31219/osf.io/ucyzb

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