The impact of changes to the within-household distribution of income support on household consumption patterns
Bruce Bradbury
Social Policy Research Centre
Contact Email:   b.bradburyunsw.edu.au

Research in several other countries suggests that the distribution of income within the household influences household consumption patterns. In particular, income received by mothers is more likely to be directed towards child consumption than is income received by fathers. Rigorous testing of this hypothesis is difficult, however, because it is rare to observe variations in income distribution patterns that are not correlated with other unobserved influences on consumption patterns.

This paper examines this issue drawing upon the 'natural experiment' of the changes to Australian income support payments made during the 1990s. In January 1993 child-related payments for income support beneficiaries began to be paid to the primary carer (usually the mother) rather than the primary benefit recipient (usually the father in couples). This was followed in September 1994 with the introduction of Partner Allowance which provided the spouses of beneficiaries with their own income support payment. This paper examines the impact of these income support changes on the patterns of consumption expenditure in beneficiary and non-beneficiary households, using data from the ABS Household Expenditure Surveys of 1988-89, 1993-94 and 1998-99.

Despite the large magnitude of the income distribution changes, the changes in expenditure patterns that can be ascribed to the policy change are small and do not provide support for the hypothesis that women’s control over household expenditures was increased. It is speculated that the frequent use of joint bank accounts and, paradoxically, the large magnitude of the policy change are responsible for the Australian result.

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