Social policies have tremendous potential to improve children’s long-term outcomes. At the same time, policies that are not carefully designed and implemented can have unintended consequences, holding children back from their potential. Mary-Alice Doyle from the London School of Economics and colleagues examine Australia’s experience with welfare reform and provide some examples of these unintended consequences.
The following is a summary of two related research projects by the authors. The first, analysing birthweight, can be found here.
The second, analysing children’s longer-term health, is work in progress. For more information please contact Mary-Alice Doyle at the London School of Economics (email: firstname.lastname@example.org).
In 2007, the Australian government introduced ‘income management’, which restricted how people receiving welfare payments could spend their money. The new policy was introduced in remote Aboriginal communities in the Northern Territory (NT). Its intention was to increase spending that benefits children, by setting aside 50% of government transfer income to be spent on essentials like food, and ensuring those funds could not be spent on alcohol, cigarettes, pornography or gambling.
PhD candidate Mary-Alice Doyle (London School of Economics) and Professor Stefanie Schurer (University of Sydney) set out to test the policy’s impact by estimating its effect on birthweight. If the policy was successful in increasing household spending on food and other essentials, this would have meant household members (including any pregnant women) would consume more food, or more nutritious food. If so, an increase in average birthweight, and a decrease in the probability of low birthweight (<2500g), would be expected.
However, the authors instead found that income management reduced birthweight, particularly for babies that were already small. The international evidence suggests that health shocks during pregnancy can have long-term consequences for children’s health and education. So the next question was: Did this early-life health shock lead to worse health in childhood?
This is work in progress, but the preliminary answer is ‘yes’. The authors analysed hospital admissions through to age 6 for the same cohort of children who were born during the income management rollout. They found that children who were exposed to income management in pregnancy or in their first three months spent more time in hospital. This was concentrated in admission for infections, consistent with evidence that children who had worse health at birth are more susceptible to infections, perhaps due to a weaker immune system.
A key question is whether these effects are inherent to the design of income management itself, or the result of initial implementation issues. The answer is important in understanding whether newborns whose parents are currently affected by income management (or the more recently introduced Cashless Debit Card) will experience these same health effects.
The authors believe that both the policy and its implementation contributed.
- On the one hand, some aspects of the initial policy rollout are unique to that period. The literature suggests that stress in pregnancy can harm children’s health. Income management formed part of the broader NT Emergency Response, which itself engendered stress, anger and resentment, and may have exacerbated the stress of adapting to income management. In addition, there were acute initial challenges in accessing funds (e.g., unavailability of a card payment system) which may have led to large short-term reductions in spending but were resolved by the end of the rollout period.
- On the other hand, more recent evidence shows that frictions remain in accessing income managed funds. These frictions reduce recipients’ purchasing power and contribute to feelings of stigma and stress.
Therefore, while initial implementation issues may have meant that the impact the authors found in the NT is particularly large, the same mechanisms that likely contributed to these worse health outcomes (lower purchasing power and stress) remain at play for current recipients.
This research forms part of the Child and Youth Development Research Partnership (CYDRP), and makes use of de-identified, linked administrative data for children in the Northern Territory.
Aizer A, Stroud L, Buka S (2016). Maternal stress and child outcomes: Evidence from siblings. Journal of Human Resources, 51(3), 523-555. doi:10.3386/w18422
Almond D, Currie J, Duque V (2018). Childhood circumstances and adult outcomes: Act II. Journal of Economic Literature, 56(4), 1360-1446. doi:10.1257/jel.20171164
Bailey MJ, Hoynes HW, Rossin-Slater M, Walker R (2020). Is the social safety net a long-term investment? Large-scale evidence from the Food Stamps program. NBER Working Paper Series, No. 26942. doi:10.3386/w26942
Chorniy A, Currie J, Sonchak L (2020). Does prenatal WIC participation improve child outcomes? American Journal of Health Economics, 6(2), 169-198.
Doyle M-A, Schurer S, Silburn S (2020). Unintended consequences of welfare reform: Evidence from birth outcomes of Aboriginal Australians. IZA Discussion Paper Series, No. 13543.
Marston G, Mendes P, Bielefeld S, Peterie M, Staines Z, Roche S (2020). Hidden costs: An independent study into income management in Australia. School of Social Science, The University of Queensland: Brisbane, Australia.
Melville JM, Moss TJM (2013). The immune consequences of preterm birth. Frontiers in Neuroscience, 7, 79. doi:10.3389/fnins.2013.00079
Miller JE, Hammond GC, Strunk T, Moore HC, Leonard H, Carter KW, Bhutta Z, Stanley F, de Klerk N, Burgner DP (2016). Association of gestational age and growth measures at birth with infection-related admissions to hospital throughout childhood: a population-based, data-linkage study from Western Australia. The Lancet Infectious Diseases, 16(8), 952-961. doi:10.1016/S1473-3099(16)00150-X
Northern Territory Emergency Response Review Board (2008). Report of the NTER Review Board. Commonwealth of Australia: Canberra, Australia. https://apo.org.au/node/551