The Power of the Purse: New Evidence on the Distribution of Income and Expenditures within the Family from a Canadian Experiment

Abstract

To increase mother’s participation in the labour market and enhance child development, the Canadian province of Québec developed from 1997 a large scale low-fee childcare network. Previous studies have shown that the policy has significantly increased the labour force participation and annual weeks worked of mothers with children exposed to the program. Using Statistics Canada’s annual 1997 to 2009 Survey on Households Spending we document the increase in the maternal share of total household income in Québec and use of instrumental variables approach to estimate the impact of the policy on intra-household expenditures. The results show that more income in the hands of mothers impacts the expenditures structure within the household by raising budget shares on expenditures related to children, family goods and services having a collective aspect.