Child Allowances and Allocative Decisions in Romanian Households

In this paper we test whether increasing child allowances will affect the intra-household allocation of consumption, measured by child and adult goods, holding total household resources constant. Our analysis is based on household survey data collected in Romania, where cash payments are made to families according to the number and age of children. We control for selectivity since there is the potential for self-selection bias in terms of the level of child allowances received. Our findings suggest that holding total household resources constant, child allowances increase demand for child goods and calories and reduce demand for adult goods