The effect of changing financial incentives in the family on youth outcomes
This seminar is presented by Dr Anna Zhu, research fellow at the Melbourne Institute of Applied Economic and Social Research, University of Melbourne.
We examine the intergenerational impacts of a reduction in the financial resources available to lone parent families. We exploit a natural experiment that unambiguously reduced government transfer payments for a subset of lone parents in Australia. The key to this reform is that it applied to mothers separating after the date of the reform implementation, while mothers separating before this date were exempt from the new rules. We apply a Regression Discontinuity Design (RDD) using biweekly administrative data capturing separations occurring among low and middle income couples. We show that the reduction in financial resources available to lone parents had little impact on the future welfare participation, housing or fertility outcomes of affected youth. Complementary analysis of a linked survey dataset, however, provides indicative evidence that youth are less likely to engage in risky behaviours and more likely to report improved health.