How did the Canada Child Benefit affect household bargaining?

Abstract

Child benefits in Canada are sizable, targeted to children and paid to custodial mothers, and so might be expected to affect household resource allocations and spousal bargaining. The introduction of the Canada Child Benefit in July 2016 more than doubled the amount of child benefits received by households with children. We estimate the effect of this change on the preferences and resource shares of men and women within dual‐parent households. Resource shares, defined as the fraction of household expenditure consumed by women versus men, are important parameters of collective household models. Using a difference‐in‐differences strategy within a structural collective household model, we find little evidence that preferences of either men or women changed in response to the increase in child benefits. However, we do find evidence that the policy increased female resource shares, but only among homeowner (and not renter) households. We discuss this heterogeneity in the treatment effect between owners and renters and suggest potential underlying mechanisms.