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Who Benefits From Child Benefit?

Blow, Laura, Walker, Ian, Zhu, Yu (2012) Who Benefits From Child Benefit? Economic Inquiry, 50 (1). pp. 153-170. ISSN 1465-7295. (doi:10.1111/j.1465-7295.2010.00348.x) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:40236)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
Official URL
http://dx.doi.org/10.1111/j.1465-7295.2010.00348.x

Abstract

Governments, over much of the developed world, make significant financial transfers to parents with dependent children. For example, in the United States the recently introduced Child Tax Credit (CTC), which goes to almost all children, costs almost $1 billion each week, or about 0.4% of GNP. The United Kingdom has even more generous transfers and spends an average of about $30 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. In the United Kingdom 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 dollar 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 toward their children that they completely insure them against shocks. (JEL I38, D79, D12)

Item Type: Article
DOI/Identification number: 10.1111/j.1465-7295.2010.00348.x
Additional information: number of additional authors: 2;
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Stewart Brownrigg
Date Deposited: 07 Mar 2014 00:05 UTC
Last Modified: 29 May 2019 12:21 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/40236 (The current URI for this page, for reference purposes)
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