Intergenerational Effects of Disability Benefits: Evidence from Canadian Social Assistance Programs

Individuals with disabilities face greater challenges in the labor market than able-bodied individuals and a growing body of research is finding that their children also tend to have more developmental problems than the children of able-bodied parents. Can transfer payments help reduce this gap? In this paper, we present the first evidence on how parental disability benefits affect the well-being of children. Using changes in real benefits under ten disability benefit programs in Canada as an identification strategy and Statistics Canada's National Longitudinal Survey of Children and Youth (NLSCY) as the data source on child outcomes, we find strong evidence that higher benefits lead to improvements in children's cognitive and non-cognitive development, as measured by math scores in standardized tests, hyperactive symptoms and emotional anxiety behavior. The effect is larger on children with a disabled mother than on those with a disabled father. JEL Codes J1 J6 I38