Welfare Reform: Consequences for the Children

TL;DR

This study examines the effects of a Danish welfare reform on children's academic performance and well-being, finding minor impacts on welfare receipt and work hours, with some negative effects on children's school well-being and increased reports to child protective services.

Contribution

It provides empirical evidence on the short-term impacts of welfare reform on children using register data and a comparative event study approach.

Findings

Welfare receipt among mothers decreased slightly.

Children's academic performance was unaffected in the short run.

Children's school well-being and reports to child protective services declined and increased respectively.

Abstract

This paper uses register-based data to analyze the consequences of a recent major Danish welfare reform for children's academic performance and well-being. In addition to work requirements, the reform brought about considerable reductions in welfare transfers. We implement a comparative event study that contrasts outcomes for individuals on welfare at the time of reform announcement before and after the implementation of the reform with the parallel development in outcomes for an uncontaminated comparison group, namely those on welfare exactly one year prior. Our analysis documents that mothers' propensity to receive welfare decreased somewhat as a consequence of the reform, just as we observe a small increase in hours worked. At the same time, we do not detect negative effects on short-run child academic performance. We do find small negative effects on children's self-reported school well-being and document substantial upticks in reports to child protective services for children exposed to the reform.