TITLE:
Measuring the Effect of Child Benefit on Household Expenditures: Evidence from Canadian Households’ Survey Data
AUTHORS:
Jason Adams, Sid Ali Amedah, Maxime Fougère
KEYWORDS:
Child Benefit, Permanent Income, Engel’s Approach, Elasticity
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.8 No.6,
June
2,
2020
ABSTRACT: This
study examines the effects of the Canada Child Benefit on household expenditures.
Estimation of child benefit impact on household expenditure is challenging
since benefit and household income may be endogenously determined. Relying on
permanent income hypothesis and based on Engel’s approach, findings suggest
that spending patterns vary by household composition and income, but overall results indicate that
receipt of this benefit is associated with a significant increase in
households’ wellbeing. More specifically, expenditure elasticities estimates
indicate that spending on child care for households receiving higher
proportions of the benefit is the most sensitive spending to any change in
household permanent income, which may indicate the existence of financial
constraints for those households that prevent them from maximizing their
utility. Similarly, spending on school-related items for those receiving lower proportions also
represents a sensitive
spending.