The effects of universal child allowance on maternal health: Evidence from South Korea

Background: Child allowance (CA) in South Korea was first introduced in September 2018. CA provides a monthly allowance to children from birth to age 5. To date, existing studies on the effects of CA in Korea have focused mainly on household economic outcomes. The current study is the first to examine the effect of CA on maternal physical and mental health, measured by self-reported health status, depression, and life satisfaction. Methods: We use nationally representative data from the Korea Welfare Panel Study (KOWEPS) from 2017 to 2018. The analytic sample consists of 772 Korean mothers whose youngest child is between age 2 and age 7. Taking advantage of an exogenous policy change and the age eligibility of the policy, we employ a difference-in-regression-discontinuities (DRD) strategy to identify the effects of CA on self-reported health status, depression, and life satisfaction. Results: Overall, we find suggestive evidence that the introduction of CA contributed to reducing depression while improving self-reported health and life satisfaction. In particular, the policy reform had a significant effect on life satisfaction, showing that CA improves life satisfaction by 0.497 points. Conclusions: Results suggest that CA can improve both physical and mental health for eligible mothers. Such findings are indicative of a causal link between income and health. There has been a recent political movement to raise the age threshold of CA to up to age 18 to cover older children and increase benefit levels. Our findings provide important policy implications for the political discussion on CA expansion.