How did the Canada Child Benefit affect household spending?
Authors: Paniz Najjarrezaparast and Krishna Pendakur
We assess how the increase in the Canada Child Benefit (CCB) in July 2016 affected household spending on various types of consumption. The increase was more than $2000 per child per year for most recipient households, so it represented a very large increase in transfers to households with children. We assess the effect of the policy change on a measure of overall consumption, and its seven constituent categories: clothing, food, health care, household operation, recreation, shelter and transportation. We focus on households whose income is below the median income (as this is the principal policy target), and evaluate effects for renters and owners separately. We find statistically significant effects of the policy change only for spending on clothing, food and shelter, and these arise only for rental-tenure households. We find that rental-tenure households with children below the median income increased their annual consumption by roughly $3000 in response to the child benefit increase of roughly $4300 for these households. With average annual consumption around $30,000, this represents an increase in consumption of roughly 10% for these households. They increased spending on food by roughly $700, and on shelter by nearly $1400. They increased spendingon clothing by roughly $300, but only on children’s clothing and not on adult clothing.
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