Baby Bonuses: natural experiments in cash transfers, birth timing and child outcomes

Abstract

We use the 1 July 2004 introduction of the Australian Baby Bonus to identify the effect of family income on child test scores at grade three. Using a difference‐in‐differences design, we find no evidence that the Baby Bonus improved child outcomes in aggregate, but some evidence of a modest effect for children from disadvantaged backgrounds. We examine whether birth shifting associated with the Baby Bonus and two other Australian maternity payments had negative long‐term effects on children. Despite widespread concerns about this unintended treatment, regression discontinuity estimates provide no clear evidence of lasting health or educational consequences. Show more