New Study Finds Families Use Cash Benefits to Help Children

Posted by Spotlight on Poverty and Opportunity on November 23, 2021

Washington State University sociologist Mariana Amorim discusses her new study that finds that lower-income parents are more likely to spend from cash benefits on essentials for their children. The study looks at how parents in Alaska spend the money they receive through the Alaska Permanent Fund dividend (PFD), a universal cash transfer program that has been paid out to Alaskans since 1982. Amorim divided parents by income level and by looking at monthly patterns, found that that low and middle-income parent increased their spending on electronics and school around the time the PFD was paid. When looking at spending over the course of the year, her findings corroborated the monthly models and showed even more evidence that only low and middle-income parents are spending the PFD in ways that develop children’s human capital. Though the study suggests that PFD has a greater impact on these families in the short term, she stresses that it is more difficult to identify how the PFD may benefit high-income families because these families may be investing the payouts or saving for future expenses such as college. Amorim also believes that the pandemic shed light on and increased support for policy shifts like cash benefits. “Giving money to parents with children regardless of their income is pretty common in developed countries, so the U.S. is a little behind on that,” said Amorim. “And I think the pandemic provided the opportunity for us make this shift and catch up with what’s being done elsewhere.”

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