Cash Transfers and Child Welfare: Lessons from Alaska

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This figure is a vertical bar graph titled, Alaska Permanent Fund Payments and Child Maltreatment. The y-axis represents a percent change and ranges from -30 to 0 percent. The x-axis has 3 labels: Total, Neglect, and Physical abuse. Each label has 2 corresponding bards: unsubstantiated referrals and substantiated referrals. For the total group: the unsubstantiated bar is just under negative 10 percent and the substantiated bar is about negative 14 percent. For the Neglect group: the unsubstantiated bar is about negative 10 percent and the substantiated bar is about negative 17 percent. For the physical abuse group: the unsubstantiated bar is near negative 30 percent and the substantiated bar is about negative 25 percent. The note on the figure reads, Bars show effect of households receiving an additional $1000 annual payment. Substantiated referrals are screened-in calls for which a case worker performed an investigation. Unsubstantiated referrals include both screened-in and screened-out calls. The source line reads, Source: Researchers’ calculations using data from PRAMS and the Alaska Office of Children’s Services.

The Alaska Permanent Fund Dividend (PFD) is a universal basic income program that has provided annual cash payments to all Alaska residents since 1982. Unlike many other transfer programs, such as the Earned Income Tax Credit, the PFD is not conditioned on income or employment status. Payment amounts fluctuate annually and average around $1,600 per capita each year.

In Effects of Universal and Unconditional Cash Transfers on Child Abuse and Neglect (NBER Working Paper 31733), Lindsey R. BullingerAnalisa Packham, and Kerri M. Raissian investigate how cash payments to families in the early months of a child’s life affect the likelihood of child maltreatment referrals to Child Protective Services.

An additional $1,000 family transfer in the first few months of a child’s life reduces the likelihood of a referral to Child Protective Services by age three by 10 percent.

The researchers study both substantiated maltreatment referrals, which resulted from formal investigations that produced evidence of legal maltreatment, and unsubstantiated referrals, a category encompassing both calls that were not investigated and investigations that did not yield enough evidence. They do this because substantiation of a referral may depend on agency capacity as well as case details. Previous studies have found that both unsubstantiated and substantiated cases are associated with similar risks of child maltreatment.

The study connects individual-level administrative data on PFD payments to birth cohort surveys and Child Protective Services records for about 9,000 Alaskan children born between 2009 and 2018. The researchers leverage the December 31 PFD eligibility cutoff to explore whether greater early childhood PFD payments influenced the rate of child abuse cases. Alaska distributes PFD payments in the fall, typically the beginning of October. To be eligible for payments in their first year of life, a child must be born by December 31 of the preceding year. A child born in January would be almost two at the time of the first payment, while one born in December would be 10 months old.

The researchers find that an additional $1,000 in early childhood PFD payments reduces the likelihood of unsubstantiated maltreatment referrals by age three by 9.6 percent. Substantiated referrals drop by approximately 15 percent. For unsubstantiated referrals, the reductions are primarily driven by declines of 10 percent in child neglect and 30 percent in physical abuse. These effects appear to persist through age five. Follow-up survey data suggest that the improvements in child treatment can be attributed to greater family stability as a result of the PFD payments. An additional $1,000 payment makes a child more likely to still be living with his or her mother at age three, and increases the likelihood of regular childcare either at the mother’s home with a relative or at a relative’s home. Calculations based on the Centers for Disease Control and Prevention estimates of the lifetime cost of child abuse value the abuse avoided at approximately $18.9 million, while the PFD payment cost was $4.5 million.

Since child maltreatment outcomes are often underreported, the researchers also examine child mortality among children already involved with child welfare services. An additional $1,000 early childhood PFD payment was associated with a 30 percent decrease in mortality by age four.

— Leonardo Vasquez

The researchers acknowledge financial support from the Cash Transfer Lab at NYU and the University of Wisconsin-Madison’s Institute for Research on Poverty Extramural Large Grant, sponsored by the US Department of Health and Human Services.