IFS Seminar - The Effect of Quarantining Welfare on School Attendance in Indigenous Communities by Stefanie Schurer (University of Sydney)

| 12:30 - 13:30
Location: Institute for Fiscal Studies -

7 Ridgmount Street, London WC1E 7AE


This paper analyzes the impact of a recent initiative by the Australian Government to reduce disadvantage in Aboriginal communities by quarantining welfare benefits. The policy – known as income management – sets aside 50 percent of welfare benefits to ensure that they are spent on priority items (food, housing, clothing, utilities, or transport) and not on excluded items (alcohol, cigarettes, gambling or pornography). We identify the causal impact of income management on school attendance rates using a quasi-experimental approach that exploits a staggered policy roll-out across communities. Importantly, we consider the differential effect of income management on the attendance rates of boys vs. girls and primary vs. secondary school students. We also investigate four key mechanisms (concurrent policy initiatives, mobility patterns, student enrollment and implementation issues) through which income management may have in influenced school attendance rates. We find no evidence that income management led to an increase in student attendance. Rather the introduction of income management reduced school attendance by 2.7 percentage points (4 percent) on average in the first five months after which attendance rates eventually returned to their initial levels. Importantly, income management did not significantly affect student enrollments or mobility patterns into and out of Aboriginal communities; thus, the drop in school attendance does not appear to be due to increased churning in student enrollments or new students. Nor are our results explained by confoundedness with other policy initiatives. Instead we find that the attendance penalty associated with the introduction of income management is dramatically reduced after the adoption of more flexible administrative arrangements suggesting that implementation issues may be responsible for the temporary reduction in school attendance that we observe.