How did the Canada Child Benefit affect household bargaining?

Krishna Pendakur ()
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Krishna Pendakur: Simon Fraser University, https://www.sfu.ca/~pendakur/

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: Child benefits in Canada are sizeable, targeted to children and paid to custodial mothers, and so might be expected to affect household resource allocations and spousal bargaining. The introduction of the Canada Child Benefit in July 2016 more than doubled the amount of child benefits received by households with children. We estimate the effect of this change on the preferences and resource shares of adult males and females within dual parent households. Resource shares, defined as the fraction of household expenditure consumed by females versus males, are important parameters of collective household models. Using a difference-in-differences strategy within a structural collective household model, we find little evidence that preferences of either adult males or females changed in response to the increase in child benefits. However, we do find evidence that the policy increased female resource shares, but only among homeowner (and not renter) households. We discuss this heterogeneity in the treatment effect between owners and renters and suggest potential underlying mechanisms.

Date: 2025-03
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