Less for more? Cuts to child benefits, family adjustments, and long-run child outcomes in larger families

Abstract

AbstractPrevious studies have examined how cash transfers affect children’s education and health regardless of sibship size. I examine the long-run consequences of a Dutch reform that gradually curtailed child-benefit payments for larger families. Based on administrative data and a regression discontinuity design, I find little evidence of average reform effects on children’s education and mental health. However, children in less well-off households exposed to the reform experience long-lasting educational penalties. Analyses of survey and admin data suggest that, if not for the reform, households would have relied more on centre-based care as opposed to maternal care. Lower parental investments in child-related goods and a more stressful environment accompanied heightened poverty risks after the reform.