Baby Bonuses: Natural Experiments in Cash Transfers, Birth Timing and Child Outcomes

We use the 1 July 2004 introduction of the Australian Baby Bonus to identify the effect of family income on child test scores at grade three. Using a difference-in-differences design, we find no evidence that the Baby Bonus improved child outcomes in aggregate, but some evidence of a modest effect for children from disadvantaged backgrounds. We examine whether birth shifting associated with the Baby Bonus and two other Australian maternity payments had negative long-term effects on children. Despite widespread concerns about this unintended treatment, regression discontinuity estimates provide no clear evidence of lasting health or educational consequences.