Effects of a monthly unconditional cash transfer starting at birth on family investments among US families with low income

Abstract

How does unconditional income for families in poverty affect parental investments for their young children? Mothers in four US metropolitan areas were randomized to receive a monthly unconditional cash transfer of either $333 per month (high) or $20 per month (low) for the first several years after childbirth. During the first 3 years, high-cash gift households spent more money on child-specific goods and more time on child-specific early learning activities than the low-cash gift group. Few changes were evident in other core household expenditures. Compared with low-cash gift families, high-cash gift families reported lower rates of public benefit receipt and fewer were residing in poverty, although mean income and wealth remain low for the majority of families by year 3. No statistically significant differences were evident in mothers’ participation in paid work, children’s time in childcare or mothers’ subjective wellbeing. In this randomized controlled trial, Gennetian et al. evaluated the impacts of cash transfers on family investments. Families with low income were randomized to receive monthly unconditional cash starting at childbirth. Households spent more money and time on child-specific goods and learning activities.