Life-long effects of incremental economic resources in childhood: the introduction of the first Swedish child allowance in 1938

Gustafscenen Session 4: Life cycles incomes and relief during stages of economic hardship organized by Anton Svensson and Louise Cormack


Louise Cormack


Adverse socioeconomic circumstances in childhood are associated with long lasting negative effects on future education, income and health. Due to endogeneity, there is however limited knowledge of the causal role of parental income and economic resources in this relationship. The aim of this study is to estimate the causal effect of incremental economic resources in childhood on educational, health and socioeconomic outcomes over the full life course in 20th century Sweden. It utilizes the introduction of the first cash-based child allowances in 1938, which targeted, among others, low-income widows with children. It uses longitudinal data from the Scanian Economic Demographic Database and applies a difference-in-differences method to derive causal results. Initial findings suggest that incremental income led to improvements in school performance in the short-term, but long-lasting effects on adulthood income or survival to old age are less clear. This is possibly due to incremental economic resources only affecting living conditions instantaneously, and fading off over time, but can also be explained by the size of the allowance, how the allowance was spent, for how long it was paid out and at what ages. Ongoing analyses explore additional adulthood economic and health outcomes as well as heterogeneities in the effects.


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