How to Think About a Child Allowance

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On the latest episode of The Weeds, Matt Yglesias and Sarah Kliff discuss the idea of a child allowance. A child allowance is a universal per-child monthly payment made to families with children, e.g. $300 per child per month. In their discussion, they go back and forth on how exactly to justify or frame such a program in non-natalist terms. As I’ve spent a lot of time on this idea over the years, I feel like chiming in on that particular point.

1. The child’s benefit

One of the first things I noticed when I started doing comparative welfare state stuff was that some places in the world conceptualize benefits for families with children — paid leave, child care, child allowance — as belonging to the children themselves. In US discourse, all of these benefits (which don’t yet exist) are conceptualized as belonging to the parents.

Insofar as such benefits help both parents and children, either emphasis can make sense. But it’s notable that in every other situation — such as with the elderly, the disabled, or the unemployed — we think of the welfare benefits as belonging to the targeted population even though those benefits obviously help the family members of the targeted population as well.

A child allowance can be justified on the basis that children deserve an income just like all the other non-working populations of our country deserve an income.

2. Simple equality

Simple equality provides another justification for child allowances. People focus a lot on pay equality in the US, but relatively less attention is given to the inequalities that result from having to stretch equal pay across unequal numbers of family members. But this inequality can be even more devastating.

A person making $15 an hour who lives alone has a much higher material standard of living than a person making $15 an hour who lives with 3 children. By conventional measures, the solo person is receiving 2 to 4 times as much equivalized income as the person with three children. Put differently, the three-child family is effectively receiving 25 to 50 cents for every dollar the zero-child family receives, despite the fact that the only eligible worker in both families is doing identical market labor.

Insofar as we think income inequality is bad, we must also think that our income distribution should take account of family size, which is what a child allowance does.

3. Enabling family preferences

There is a conceptual difference between trying to incentivize people to have more children (“natalism”) and trying to enable people to have the number of children that they have a freestanding preference for. This gets tricky of course because no preferences are truly freestanding: all are affected by the economic institutions in society. But we know from survey data that people consistently say they want to have, on average, 2.7 children and yet currently manage to have less than 2.

One of the reasons people have fewer children than they would like is the overwhelming cost of raising a child. These costs are especially devastating because peak fertility years are also the years when people are at the lowest rung of their career ladder, meaning they are making relatively low incomes and have relatively little savings.

The coincidence of low incomes, low wealth, and peak fertility years is not a function of nature. It is a function of the way that our capitalist institutions distribute income and wealth in society. A child allowance can be justified as a way of countering the capitalist maldistribution that currently prevents people from having as many (or few) children as they’d like to have.

This latter point also gets at the conceptual incoherence of the whole debate. If an economic regime with a child allowance can be said to promote having children, then can an economic regime without a child allowance be said to discourage having children? Promotion and discouragement are terms that only make sense relative to some baseline, but there is no baseline economic system. Our discourse proceeds as if the factoral income distribution that would obtain under a hypothetical laissez-faire capitalist system is the default and that every alternative distribution is a modification from that default. But that’s extremely stupid.