Author(s)

Jason Adams, Sid Ali Amedah, Maxime Fougère

Employment and Social Development, Gatineau, Canada.

This study examines the effects of the Canada Child Benefit on household expenditures. Estimation of child benefit impact on household expenditure is challenging since benefit and household income may be endogenously determined. Relying on permanent income hypothesis and based on Engel’s approach, findings suggest that spending patterns vary by household composition and income, but overall results indicate that receipt of this benefit is associated with a significant increase in households’ wellbeing. More specifically, expenditure elasticities estimates indicate that spending on child care for households receiving higher proportions of the benefit is the most sensitive spending to any change in household permanent income, which may indicate the existence of financial constraints for those households that prevent them from maximizing their utility. Similarly, spending on school-related items for those receiving lower proportions also represents a sensitive spending.

Child Benefit, Permanent Income, Engel’s Approach, Elasticity

Adams, J. , Amedah, S. and Fougère, M. (2020) Measuring the Effect of Child Benefit on Household Expenditures: Evidence from Canadian Households’ Survey Data. Open Journal of Social Sciences, 8, 44-58. doi: 10.4236/jss.2020.86005.