Do Child Tax Benefits Affect the Wellbeing ofChildren? Evidence from Canadian Child BenefitExpansions

A vast literature has examined the impact of family income on the health anddevelopment outcomes of children. One channel through which increasedincome may operate is an improvement in a family’s ability to provide food,shelter, clothing, books, and other expenditure-related inputs to a child’sdevelopment. In addition to this channel, many scholars have investigated therelationship between income and the psychological wellbeing of the family.By reducing stress and conflict, more income helps to foster an environmentmore conducive to healthy child development. In this paper, we exploitchanges in child benefits in Canada to study these questions. Importantly, ourapproach allows us to make stronger causal inferences than has been possiblewith the existing, mostly correlational, evidence. Using variation in childbenefits across province, time, and family type, we study outcomes spanningtest scores, mental health, physical health, and deprivation measures. Thefindings suggest that child benefit programs in Canada had significantpositive effects on test scores, as has been featured in the existing literature.However, we also find that several measures of both child and maternalmental health and well-being show marked improvement with higher childbenefits. We find strong and interesting differences in the effects of benefitsby sex of the child: benefits have stronger effects on educational outcomesand physical health for boys, and on mental health outcomes for girls.[...]