Child Allowance Policy and Household Consumption
Behavior in Japan
Huihui LI
Minae NIKI
May 2021
Discussion Paper No. 2114

GRADUATE SCHOOL OF ECONOMICS
KOBE UNIVERSITYROKKO, KOBE, JAPANChild Allowance Policy and Household Consumption
Behavior in Japan
Huihui LI1
E-mail address: li@econ.kobe-u.ac.jp;
Graduate School of Economics, Kobe University 2-1, Rokkodai, Nada-Ku, Kobe 657-8501, Japan

Minae NIKI
E-mail address: minae.niki@people.kobe-u.ac.jp;
Graduate School of Economics, Kobe University 2-1, Rokkodai, Nada-Ku, Kobe 657-8501, Japan

1

Corresponding author.
1

Abstract
We examine the labeling hypothesis of the child allowance system (CAS) on household expenditure in Japanin difference–in–difference approach. In 2010–2012, the CAS was extended to junior high school students andthe amount increased for all ages. This allowed us to use a quasi-experimental research design to identify the
impact of policy reform by eliminating confounding variations common to all families. Specifically, we clarify
the effect of children’s allowance on household consumption expenditure. The results show that (1) the treatment
effect on expenditure for both child- and adult-related consumption on average is not significant, and (2) there areheterogeneous treatment effects: the CAS reform has a positive effect on supplements and recreational goods
related to children’s goods in the lowest quintile group of the income distribution. We conclude that the childallowance in Japan as a labeled transfer greatly increases the welfare of children, especially those from relatively
low-income families.
Keywords: child allowance system, household expenditure, quasi-experimental research, labeling hypothesis,
Japan
JEL: D13

1

Introduction

About one in seven children in Japan is living in poverty,2 and alleviating child poverty is an essential issue. One
meaningful remedy is government cash transfers targeting children or other household members. Among theJapanese government’s cash transfer policies, the child allowance system (CAS; “Jidou Teate” in Japanese) drewsignificant attention from researchers. To improve children’s welfare, the CAS was revised in 2010 to include
junior high school students as eligible children for the first time since 1986. Indeed, the exogenously increased
household income may change the distribution of household income, which in turn affects household consumption
expenditure. Household consumption expenditure for a child’s development is an essential component of humancapital investment (Behrman & Knowles, 1976; Becker & Tomes, 1999). The rising inequality of household
expenditure on children may largely contribute to the difference in children’s physical development andeducational outcomes (Chi & Qian, 2016; Gustafsson & Li, 2004), and subsequently, the associated rise inchildren’s poverty and a generational cycle of poverty. Therefore, to clarify the efficiency of the revised CAS,
this study explores whether the expansion of cash transfer targets impacts household consumption allocation.
Many countries implemented child subsidy policies to improve child welfare (Benhassine et al., 2015; Blacket al., 2014), and there is extensive literature on the effect of cash transfer reform targeted at child development(Naoi et al., 2021; Fernald & Hidrobo, 2011; Ponce & Bedi 2010), maternal employment (Bessho, 2018; Havnes& Mogstad, 2011; Milligan & Stabile, 2009), parents’ mental health (Takaku, 2015), child and family well-being

2

Summary Report of Comprehensive Survey of Living Conditions 2019 reports that the child poverty rate (child aged 17 andunder) was 13.5% in 2018. (URL: https://www.mhlw.go.jp/english/database/db-hss/dl/report_gaikyo_2019.pdf)
2

(Baker et al., 2008), and birth rate (Milligan, 2005). However, the most direct impact of the cash transfer policyof child allowance is that it affects the source of household income. Therefore, before analyzing the above issues,
it is crucial to study how cash transfers affect household income resource distribution.
Three hypotheses explain its nature: pooling (Becker, 1991), labeling (Edmonds, 2002; Hener, 2017;
Kooreman, 2000), and flypaper (Jacoby, 2002; Sahn & Gerstle, 2004). The pooling hypothesis is a standard theory
that explains the homogeneity between child allowance and other types of household income. Recipients of childallowance tend to confuse it with family income from other sources and maximize household utility under thebudget constraint of the total family income, including the child allowance. In contrast, the labeling hypothesis
states that the type of income affects its use, contradicting the principle of income fungibility (Barberis et al.,2006; Rabin & Weizsäcker, 2009). The flypaper hypothesis is similar to the labeling hypothesis; it transfers the“stick” to the child. Depending on which hypothesis is valid, the impact of child allowance on expenditures forchildren’s development may differ.
As a labeled transfer, researchers verified the labeling effect of the child allowance. Sahn and Gerstle (2004)
show that in Romania, child benefits increase child-related education and toy expenditure. For Germany, Hener(2017) estimated the impact of child benefits on child-assignable savings and concluded that child allowances
affect housing savings plans by up to 6.6 percentage points and increase child-assignable education and toy
expenditure, but have no effect on adult-assignable consumption. Kobayashi (2011) examined the effect of CAS
on consumption patterns in Japan and concluded that child allowance benefits increase the demand for children’s
goods and nourishment while decreasing the demand for adult goods. However, for the UK, Blow et al. (2012)
point out that the child benefit is spent on adult-assignable goods, with half of the child benefit marginal dollar
being spent on alcohol expenditure. Unayama (2011) and Stephens and Unayama (2015) showed that most childallowances in Japan are not spent, but saved. The empirical literature on the effect of child allowance on
consumption expenditure produced ambiguous results.
Our study differs from previous studies in two ways. First, it focuses on the impact of cash transfers on juniorhigh school students’ consumption expenditures, a group that rarely received attention in previous studies. Second,
it presents new evidence that supports the labeling effects, specifically in Japan, as literature on labeling effects
in Japan is lacking. In particular, we focus on the CAS reform from 2010 to 2012, which included junior highschool students as children eligible to receive the child allowance, and provide new evidence on the effects ofchild allowance policy reforms on different expenditure patterns by distinguishing between child- and adultrelated consumption expenditures. In the analysis, we use microdata from the 2009 and 2014 Japan National
Survey of Family Income and Expenditure (NSFIE), a nationally representative and large-sized survey forhousehold consumption in Japan. This allows us to use a quasi-experimental research design to identify the impact
of policy reform by eliminating confounding variations common to all families.
We exploit the cross-eligible group variation in the rollout of the CAS reform and apply a difference-indifferences (DID) strategy to identify the causal effects of the CAS reform. The major findings from the analysis
3are as follows. First, the treatment effect on expenditure for both child- and adult-related consumption on average
is not significant. Second, there are heterogeneous treatment effects such that the CAS reform has a positive effecton supplements and recreational goods related to children’s goods in the lowest quintile group of the income
distribution. The results are robust to several tests. Thus, we conclude that the child allowance in Japan as a labeledtransfer greatly increases the welfare of children, especially those from relatively low-income families.

2

Child Allowance Policy Reform

This section presents a brief history and overview of Japan’s CAS, a cash subsidy policy aimed at children. The
allowance is paid to the person who takes care of the eligible child. Under normal circumstances, the recipient isthe eligible child’s parent who earns a higher wage. The policy was reformed over time in terms of its purpose,
restrictions on policy payment features including the child’s age, the number of children, the amount of childallowance, and the recipient’s income.
Japan’s CAS began in 1971. Families with at least three children were eligible for the benefits. If the thirdand subsequent children were under 15 years of age, the family could receive benefits. In the 1970s, as a result ofpolicy reform, the payment amount increased from 3,000 yen to 5,000 yen per month. At this stage, the goal wasa redistribution policy that subsidized low-income families with many children.
In 1986, the CAS was amended again. The age limit was changed from 15 to 6 years. Moreover, in addition
to the third and subsequent children, the second child also became eligible to receive the benefit at 2,500 yen per
child per month. In 1992, eligibility was extended to all children in the family. However, the age of the children
was limited to below three years. The first and second children received 5,000 yen per month, while the third andsubsequent children received 10,000 yen per month. Although the age limit for eligible children continued toreduce the beneficiaries of the CAS, it expanded to cover more younger parents. Therefore, at this stage, the CAS
was considered a means of income redistribution between generations.
Since 2000, the CAS was reformed several more times to address the falling birth rate and ease the economic
burden of childcare. From 2000 to 2007, the CAS was reformed four times, and the age limit for eligible children
was relaxed from 3 to 12 years, covering all children from birth to graduation from elementary school. In 2007,
children below 12 years from all families were eligible for the benefits. The first and second children could receive
5,000 yen per month,3 and the third and subsequent children 10,000 yen per month. Income limitations also
gradually relaxed.
From 2010 to 2012, the CAS was reformed twice. During this period, the Democratic Party of Japan came
to power and the CAS was renamed “Kodomo Teate” in Japanese.4 The first reform in this period was in 2010,
which increased the age limit to 15 years (junior high school graduates), increased the benefit to 13,000 yen permonth for all children meeting the age limit, and removed the income limitation. The second revision was in 2012.
3
4

If the first and second children are aged 0–3 years, they could receive 10,000 yen per month.
On April 1, 2012, the policy was changed back to its original name, “Japan Child Allowance.”4

At this stage, the CAS aimed to support the healthy growth of children. The recipient receives the annual childbenefit in three installments: February, June, and October. The allowance amount was revised to 15,000 yen permonth for children below three years, 10,000 yen per month for children aged 3–12 years (elementary school
graduates), 15,000 yen per month for children aged 3–12 years (if they were the third-born or later), and 10,000
yen per month for junior high school students. Additionally, the Liberal Democratic Party (see Appendix 1)
reintroduced the income cap. The benefit was 5,000 yen per month per child for households with income above
the upper limit (called “Special Interim Allowances”).
The change between 2010 and 2012 allows us to conduct a quasi-experiment to test whether CAS supports
the labeling hypothesis. Fig. 1 shows the total amount of child benefit received by eligible children under 15 yearsof age in 2009 and 2014 (Figs. 1a and 1b show the total amount received by the first/second child and the thirdchild, respectively at the two time points). As shown in Fig. 1, the new CAS in 2014, after the reform, offered
substantially higher benefits than the old CAS in 2009 before the reform. The most significant increases in benefits
were for junior high school students aged 13–15 years: compared with the CAS amount in 2009, in 2014, theallowances of 13-, 14-, and 15-year-old first- and second-born junior high school students were increased by 576,
816, and 1,056 thousand yen, respectively; for third-born children, the allowances were increased by 696, 1,116,
and 1,536 thousand yen, respectively. Increase in child allowance generally leads to an exogenous increase inhousehold income. To determine whether the pattern of expenditure changed, we focus on the child- and adultrelated spending categories within the family.

Fig. 1a Total amount of child allowance: first/second child

1400

1296

1236

1200

1176

1116

1056 1056

Thousand Yen

1000

996

996
876

720

800

720

600

600
400

996

660

600

540

480

420

816

756

660
540

420

360

240

300

360
240

200

180

120

180
60

1

0

0
15

14

13

12

11

10

9

8

7

Child Age
2009

2014

5

6

5

4

3

2

Fig. 1b Total amount of child allowance: third child2500

Thousand Yen

2000

2016 1956

1716

1440 1440

1500

1200

1000
500

1896 1836

1596

1320

1476

1200

1356

1080

840

1236
960

1116
840

996
720

480

876
600

720
480

540
360

360
240

180
120

0
15

14

13

12

11

10

9

8

7

6

5

4

3

2

1

0

Child Age
2009

3

2014

Estimation Approach and Data

3.1 Estimation Strategy
The CAS policy changed greatly since its introduction. Nevertheless, allowances are still paid to recipients (e.g.,parents) of eligible children. Before evaluating whether the CAS achieved its policy objectives, we must assess
whether the child allowance has a labeling effect.
The CAS reform implemented between 2010 and 2012 expanded the beneficiary group to junior high school
students. According to the Survey on the Use of Child Allowance in 2012, 1.8% of the recipients used childallowance for “adult and entertainment expenses,” while most spent it on “children’s education (including the“Intended use” answer)” (44.2%), which shows that it reduced the relative cost of childcare to some extent by
increasing the disposable income of eligible households. Therefore, the labeling effect is tested by evaluating theimpact on household consumption expenditure for households with junior high school students. We identify thecausal effect of child labeling on expenditures by comparing treated and controlled families, as described below.
The treatment group included children from families with only junior high school students. The control groupconsisted of children from families with only children under elementary school (including elementary school
students). In a DID model (Hener, 2017), the control group depicts a counterfactual indicating how the treatmentgroup would evolve in the absence of a treatment.
We consider a DID framework in which the effect of a treatment is calculated by depicting the average
difference over time between the treatment and control groups. The effect of treatment on the outcome can beconsidered 𝛿 in Equation (1).
6𝛿 = {𝐸(𝐸𝑥𝑝𝑖𝑡 |𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 = 1, 𝐴𝑓𝑡𝑒𝑟𝑡 = 1) − 𝐸(𝐸𝑥𝑝𝑖𝑡 |𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 = 0, 𝐴𝑓𝑡𝑒𝑟𝑡 = 1)} −{𝐸(𝐸𝑥𝑝𝑖𝑡 |𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 = 1, 𝐴𝑓𝑡𝑒𝑟𝑡 = 0) − 𝐸(𝐸𝑥𝑝𝑖𝑡 |𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 = 0, 𝐴𝑓𝑡𝑒𝑟𝑡 = 0)},(1)

where 𝐸𝑥𝑝𝑖𝑡 is the outcome variable (child- and adult-related consumption expenditures) of family i in period t,
and 𝐸(∙) is the expected conditional average value of 𝐸𝑥𝑝𝑖𝑡 . Let 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 be a treatment indicator that takes
the value “one” for families with only junior high school students (treatment group) and “zero” for families inwhich school-age children are below junior high school (control group). The period before the reform refers to2009 (𝐴𝑓𝑡𝑒𝑟𝑡 = 0), and the period after the reform refers to 2014 (𝐴𝑓𝑡𝑒𝑟𝑡 = 1).

3.2 Data5 and Sample Restrictions
The data used in this study were adopted from the NSFIE, conducted every five years since 1959 by the Statistics
Bureau of Japan, the Ministry of Internal Affairs and Communication. The NSFIE has detailed information on
income, consumption, and assets at the household level for multiple regions. Its data include family income andexpenditure, dwelling house and land owned, status of major durable goods, and total amount of savings andliabilities. The surveyed households are divided into two-or-more-person households and one-person households.
The survey period is three months (September–November) for two-or-more-person households and two months(October–November) for one-person households. The NSFIE is designed to sample approximately 57,000
households (including 4,400 one-person households).
As the CAS reform period is 2010–2012, we use the NSFIE period 2009 (the 11 th survey) for two-or-moreperson households 6 , representing the pre-reform period, and 2014 (the 12th survey) for two-or-more-personhouseholds, representing the post-reform period. From this large-scale survey, we obtain a large sample ofhousehold average spending, including parents’ and children’s expenditure information. The only shortcoming of
the NSFIE is that it collects household expenditure information instead of individual household expenditure
information.
We restrict our sample to families with at least one child below 15 years old and those with no children over
16 years old to ensure that all children are eligible to receive child allowance during the policy evaluation. To
make the families in the sample more comparable, we exclude households with high school students. The quasiexperimental research framework is designed based on the inclusion of junior high school students aged 13–15
years in the eligibility criterion, so we exclude families with elementary students aged 13 years or junior highschool students aged 16 years. As shown in Appendix 1, we exclude samples with parents earning incomes more

5

The results of this study are from the original analysis conducted by the authors based on data from the Japan National
Survey of Family Income and Expenditure, and are different from the statistical data information created and released by theStatistics Bureau of the Ministry of Internal Affairs and Communications.
6
In cleaning up the data for the analysis, we refer to the Kobe University Workshop on Anonymous Data Use. See NIKI
(2014), URL: http://www.econ.kobe-u.ac.jp/kuma/satellite/pdf/308.pdf
7than the income cap. Additionally, we limit the sample to households with married couples to minimize
heterogeneity in household expenditure decisions. The sample is also restricted to fathers aged 18–59 years andworking fathers. We only analyze samples from nuclear families that do not include grandparents. Finally, we
exclude families that suffered from natural disasters in the past five years because such events are more likely tocause family deficits.

3.3 Empirical Model
Equation (2) is an empirical model based on the identification strategy of Equation 1.

𝐸𝑥𝑝𝑖𝑡 = 𝛼 + 𝛿(𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 × 𝐴𝑓𝑡𝑒𝑟𝑡 ) + 𝜕𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 + 𝛾𝐴𝑓𝑡𝑒𝑟𝑡 + 𝑿𝒊𝒕 𝜼 + 𝜀𝑖𝑡 ,(2)where 𝐸𝑥𝑝𝑖𝑡 denotes monthly expenditures by household i in year t. Table 1 describes the expenditure categories
in the NSFIE. The outcome variable, 𝐸𝑥𝑝𝑖𝑡 , refers to three child-related and three adult-related consumption
expenditures. The labeling hypothesis predicts that as junior high school students begin receiving child allowances
after the CAS reform, children’s consumption expenditures increase, but adults’ consumption expenditures do notincrease; therefore, we focus on expenditures related to children. Child-related consumption expenditures include“supplements” (e.g., school textbooks and reference books for studying and tutorial fees; Kubota, 2016), “lessonfees” (e.g., other educational, cultural, sporting, language, music, and private lesson fees), and “recreational goods”(e.g., musical instruments 7 , desks and chairs for students and office workers, and durable and non-durable
stationery). However, because the data on expenditure are at the household level (not at the individual level), there
may be an upward bias when interpreting the impact on children’s expenditures. Adult-related consumption
expenditures include “alcohol and tobacco,” “social expenses” (e.g., monetary gifts and other social expenses),and “luxury goods” (e.g., accessories, wristwatches, other personal effects, services related to personal effects,
religious contributions, family altar and gravestones, wedding expenses, funeral expenses, and other ceremonial
expenses; Hener, 2017). We also analyze the effect on the child- and adult-related expenditures combined. We
also estimate the impact of the CAS reforms on household food expenditure (Kubota, 2016) and fuel, light, andwater expenditures, which we use as a placebo outcome. 𝛼 is the outcome of the pre-reform expenditure for eachcategory. 𝛿 is the coefficient of the interaction term of 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 and 𝐴𝑓𝑡𝑒𝑟𝑡 , which indicates the averagetreatment effect on the treated. 𝜕 denotes the difference between the treatment and control groups, and 𝛾 is thecommon time trend.
Although the DID framework can eliminate common confounding variations between families with andwithout children in junior high school, changes in household characteristics over time would affect the control
and treatment groups. Other variables related to each expenditure category also vary between the pre- and post7

The expenditure on musical instruments does not seem to be a child-related expense, but Hener (2017) argued that theeducational value of musical instruments could benefit children.
8

Table 1 Classiﬁcations of expenditures in the NSIE
Variables

Classiﬁcation: “The NSIE

Supplement [780; 790−792]
Total of childassignable expenses

Total of adultassignable expenses

Includingclassiﬁcation name” [code]

Lesson fees [870−872;
874−876; 879]

School textbooks and reference books for study; tutorial fees
Lesson fees (other educational, other cultural, sporting, language, music); other private lesson fees

Recreation goods [806, 807,

Musical Instruments, desks and chairs for students and office workers, stationery durables, stationery non-

820, 821]

durablesAlcohol and tobacco“Sake”; “shochu”, distilled spirits; beer; whiskey; wine; low-malt beer and beer-flavored alcoholic beverages;[3X1~3X9, 3XX, 940]

“chu-hi”, liquor with soda and fruit, cocktail; other alcoholic beverages; tobacco

Social expenses [970-973]

Money gifts; other social expenses

Luxury goods [928, 930, 932,

Accessories; wrist watches; other personal effects; related services to personal effects; religious contribution;

935, 950, 955~958]

family altar and gravestones; wedding expenses; funeral expenses; other ceremonials
Cereals; fish and shellfish; meat; dairy products and eggs; vegetables and seaweeds; fruits; oils, fats andFood

Food [102～398, 39X, 39Y]

condiments; cakes and candies; cooked food; beverages; alcoholic beverages; eating out; school lunch; charges
for board

9reform periods. Therefore, we control for the observable household characteristics of household i in yeart using 𝑿𝒊𝒕 . 𝑿𝒊𝒕 , which includes the husband’s age, wife’s age, the dummy for the homeowner, thedummy for household debt, gender of the household head, and number of children for each age interval.
We control for the husband’s and wife’s ages to minimize the heterogeneity of parents’ ages on
consumption patterns over the life cycle (Hener, 2017). We also control for family size, dummy for houseownership, dummy for household debt, and gender of the household head because they may be related
to household consumption patterns. Additionally, we control the number of children in each age group,
namely, 3-year-olds and below, 3–5 years old, 6–12 years old, and 13–15 years old. The dummy for thebreadwinner(s) ﬁxed effect is a control variable. 𝜀𝑖𝑡 is an independent and identically distributed error
term.

3.5 Descriptive Statistics
The summary statistics of the baseline results on the means of the variables are provided in Table 2.
Columns (1)–(3) and (4)–(6) present the means of the variables before and after the CAS reform,
respectively. Columns (1) and (4) are the treatment groups, and Columns (2) and (5) are the control
groups. Column (7) shows the means of DID, obtained by subtracting the means in Column (3) from themeans in Column (6).
Table 2 shows that total child-related expenditure for households with only junior high school
students was 20,305 yen in 2009 (Column 1), which was 10,915 yen more than that for households
without junior high school students (Column 3). For the child-related expenditure, supplement expenses
were larger for households only with junior high school students than for those without junior high school
students in 2009 and 2014, while the difference between before and after the CAS reform was a negativevalue (-1,183 yen). Lesson expenses were lower for households with only junior high school students
than for those without junior high school students in 2009 and 2014; the difference between before andafter the CAS reform was negative (-169 yen). Recreation goods expense showed the same result as
lesson expenses, but the average value of the difference was -36 yen. The difference in supplement
expenses, which is the largest among the three categories of child-related expenses, requires special
attention. Table 2 also reports the means of adult-related expenses for each category, which shows that
alcohol and tobacco expenses decreased after the reform, from 4,328 to 3,969 yen in the treatment group,
whereas it decreased from 3,648 to 3,393 yen in the control group, suggesting a negative treatment effect(-105 yen). Results for social and luxury expenses also indicate a negative treatment effect by the CAS
reform (-1,727 for social expenses and -213 for luxury expenses). The summary statistics for food as aplacebo outcome in Table 2 indicate that food expenditure increased in the treatment group from 74,367
to 75,181 yen, whereas it increased from 62,083 to 66,010 yen in the control group, suggesting a negative
treatment effect (-3,112 yen).
10

Table 2 Descriptive statistics: Baseline results2009 (Before)

Observation
size
Food

Treatment

Control

group

group
(1)

(2)

465

7312

74367.100

62083.140(24678.900)(23353.320)

2014 (After)(1)–(2)(3)

Treatment

Control

group

group

(4)

(5)

486

6236

75181.150

66009.640(26506.930)(24644.000)

14987.510

2180.901(20342.590)(7548.697)

3124.992

6062.975(6165.500)(9054.481)

832.024

1173.148(1158.744)(4712.963)

3968.596

3393.133(6898.102)(5226.437)

8195.253

8675.656(12318.530)(11518.220)

1060.957

1593.317(2842.988)(13333.390)(4)–(5)(6)–(3)(6)(7)

12283.960

9171.510-3112.450

12806.609-1182.825-2937.983-169.174-341.125-35.779575.463-104.812-480.403-1727.316-532.360-213.311

Child-assignable consumption expenditures
Supplement

16410.590

2421.156(21047.690)(8367.481)

3186.1835954.992(7126.291)(8981.827)

Recreation

708.4841013.829

goods(1014.293)(3488.336)

Lesson13989.434-2768.809-305.345

Adult-assignable consumption expenditures
Alcohol

4328.468

3648.193

and tobacco(5683.371)(5161.577)

Social11067.270

9820.357(13148.710)(23078.120)

Luxury1350.747

1669.796

goods(4896.838)(22677.440)

680.275

1246.913-319.049

11

Table 2 shows the use of the simplest DID analysis, which calculates the difference between the meanvalue of the treatment group and that of the control group, and concludes that the mean value of thetreatment effect in each category was negative. However, the average value does not reflect the causal
effects of policy reform. Therefore, we use econometric analysis by controlling for other variables toverify the average treatment effect of the CAS reform.

4

Results

This section reports the baseline results and verifies their robustness. The reported values of child- andadult-related consumption expenditures are nonnegative, with a substantial number of observations
massed at zero. To obtain unbiased and consistent estimates, this study uses Tobit models instead ofordinary least squares estimation to estimate equations with censored dependent variables (Tobin, 1958).
We report the coefficients and marginal effects on the expected value of the censored outcome. The
reported values of food consumption expenditures do not have the above situation, so we use an ordinary
least squares estimation for its empirical equation.

4.1 Baseline Results
Table 3 reports the baseline results of the DID estimations on child- and adult-related expenditures. The
coefficient estimates, bootstrapped standard errors (parenthesized values), and average marginal effect(italics) of the Tobit models are reported in Table 3. Columns (1)–(3) and Columns (4)–(9) list the results
for the effect of the CAS reform on child- and adult-related consumption expenditures, respectively. All
estimations include control variables of household characteristics.
The main parameter of interest is the coefficient of the treatment effect (𝛿). The results in Table 3
show that the 2010–2012 CAS reform has a positive effect on each child-assignable consumption
expenditure category (supplement expenditures, lesson expenditures, and recreational goods
expenditures). Although the results are not statistically significant, they show that the reforms increaseeach category’s consumption expenditure. For adult-related expenditures, we find that treatment effects
are statistically significant only in adults’ luxury goods expenditures. The marginal effect of the treatment
effects on adults’ luxury goods expenditures is -718.918, signifying that the expenditure on supplements
decreased by an average of 719 yen per month after the CAS reform.
The baseline results suggest that the 2010–2012 CAS reform positively affected the supplement, lesson,and recreational goods consumption expenditure for children but was not statistically significant. Thisfinding is consistent with González (2013), who used a regression discontinuity design to confirm that
Spanish families eligible for universal child benefit (one- time subsidy) did not change their consumption
pattern. Moreover, Stephens and Unayama (2015) pointed out that most child allowances are saved fromthe perspective of household wealth accumulation, but such research is beyond the scope of our study.
12However, considering that each family faces different liquidity constraints that result in different
consumer responses to the CAS reform, we discuss this in Section 4.3.

4.2 Robustness checks: Validity of the DID Strategy
The DID identification strategy assumes that no other shocks affected the consumption expenditures that
occurred simultaneously with the CAS reform. Therefore, similar to previous studies using the DID
model, we perform placebo tests to support our baseline results (Kubota, 2016). Considering the stabilityof daily food consumption expenditures, we use a placebo test on “food” expenditures to test therobustness of the DID estimation results (Kubota, 2016). Again, “food” refers to the total expenditure on
drinking and eating. Column (7) of Tables 3–5 reports the results of the treatment effect on foodconsumption expenditure. Similar to Kubota (2016), we find that the result for food expenditure is notstatistically significant, suggesting that the reform did not affect food consumption expenditure, as
expected. In addition, we performed a placebo test on the fuel, light, and water expenditure, and theresults, similar to food expenditure, are not statistically significant8.
Because our empirical strategy uses only external factors of policy changes, we also focus on several
dimensions (i.e., regional confounding factors and household income) to perform a robustness check(Hener, 2017; Tang et al., 2016). We rerun the baseline model of the DID estimates, considering theimpact of simultaneous shocks that may confound the results. The CAS is implemented nationwide basedon the law, but, in addition, local governments provide various allowances for childcare, and benefits
vary greatly by municipality. For example, Fukushima City implements the “childcare household support
allowance,” which provides parents with children registered as residents of Fukushima city 10,000 yen
per child per year until the child graduates from junior high school. If the local government introduced
its own childcare subsidies around the time of the CAS reform, estimators might be biased without
controlled confounding factors in our estimation of the treatment effect. Unmeasured factors may also
inﬂuence the consumption expenditures of children and adults. Therefore, we further add controls for the
prefecture of residence-ﬁxed effects (reference: Hokkaido) and the city group of residence-ﬁxed effects(reference: major cities) in Equation (2), and re-estimate the empirical model in our regressions. Table 4reports the results when controlling the regional fixed effect. Coefficients are mostly the same as in Table
3, but the result for luxury goods expenditures loses its significance. Table 4 shows that the baseline
results are robust.
Then, we test the robustness related to household income. The increase in child allowances
increases household income (inclusive of child allowances), thereby triggering the income effect andreducing labor supply (González 2013). Thus, the implementation of the 2010–2012 CAS reform may

8

The detailed coefficient estimates are available upon request.
13

Table 3 Baseline results: Effects of the reform on household expenditures
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures

EffectTreatment

After

Constant

Observations

(6)

(7)

Adult-assignable consumption expenditures

Recreation
Supplement

(5)

Food

Alcohol andLessongoods

tobaccoSocialLuxury goods

693.168

601.839138.773-97.577-1,271.153-1,767.382*-1,388.637(1,733.067)(985.442)(131.646)(475.573)(1,109.255)(1,048.947)(1,659.627)

181.293312.07179.659-66.847-812.983-718.918*

7,332.222***-9,628.684***-560.854***872.878-84.536424.471

1,361.741(1,991.758)(1,088.865)(154.982)(623.911)(1,355.618)(1,136.472)(2,011.072)

1,917.691***-4,992.751***-321.944***597.985-54.066172.662-2,810.184***-789.969***

142.804*-426.323***-2,519.713***

1,252.214***2,325.704***(459.637)(235.290)(75.914)(106.982)(679.982)(398.160)(389.441)-734.984***-409.622***81.973*-292.063***-1,611.516***509.363***-62,027.556***-31,586.385***-1,608.080***

3,495.656**-8,932.042*-7,162.741**

553.276(4,819.241)(2,491.830)(353.827)(1,461.274)(5,076.820)(3,201.113)(3,716.359)

14,49914,49914,49914,49914,49914,49914,499R-squared

0.157

F

69.65

191.17

8.7

13.56

15.22

2.14

177.97

Pseudo R2

0.03150.02270.00090.00080.00040.0001

No

No

No

No

No

No

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

No

No

No

No

No

No

Hh. income
controls
Add.
controls
Regioncontrols

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level

14

Table 4 Robustness checks: Effects of the reform on household expenditures with controls for confounding factors
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures
Supplement

EffectTreatment

After

Constant

Observations

Lesson

(5)

(6)

(7)

Adult-assignable consumption expenditures

Recreation

Alcohol andgoods

tobaccoSocialLuxury goods

Food

719.355

622.333140.858-34.086-1,178.070-1,592.914-1,167.382(1,704.023)(977.415)(134.054)(475.221)(1,099.470)(1,036.816)(1,650.514)

188.380323.16280.842-23.345-753.358-647.509

7,721.434***-9,101.285***-535.590***721.528

59.221

679.497

1,821.985(1,959.455)(1,078.821)(159.183)(625.134)(1,322.450)(1,136.964)(2,001.537)

2,022.038***-4,726.073***-307.388***494.164

37.871276.211-2,981.540***-881.418***133.552*-422.262***-2,593.360***

1,209.608***

2,185.126***(459.981)(232.290)(74.211)(106.576)(700.366)(395.687)(387.338)-780.786***-457.699***

76.649*-289.201***-1,658.415***

491.698***-60,143.145***-33,036.609***-1,447.022***

5,002.377***-9,911.515*-7,718.397**

1,192.297(4,909.864)(2,597.230)(382.612)(1,494.066)(5,739.710)(3,225.663)(3,815.854)

14,49914,49914,49914,49914,49914,49914,499R-squared

0.177

F

18.05

48.15

4.16

5.81

5.02

0.99

47.51

Pseudo R2

0.03350.02480.00110.00170.00080.0004

Hh. income

No

No

No

No

No

No

No

Add. controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Region controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

controls

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level

15

Table 5 Robustness checks: Effects of the reform on household expenditures using additional controls
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures

Effect(6)(7)

Adult-assignable consumption expenditures

Recreation
Supplement

(5)

Food

Alcohol andLessongoods

tobaccoSocialLuxury goods

565.910702.096130.887-91.869-1,217.441-1,595.178-1,267.151(1,677.800)(966.443)(134.520)(480.903)(1,091.372)(1,063.797)(1,563.145)

147.767

365.149

75.113-62.926-777.354-648.617-55,322.482***

19,280.594**

412.843

6,119.362-3,652.208

1,903.544-382.718(14,052.455)(8,806.722)(1,225.095)(4,515.410)(11,832.184)(9,593.325)(13,673.264)-14,445.484***

10,027.526**

236.920

4,191.466-2,331.988

774.001-2,969.965***-849.657***

124.374*-432.879***-2,618.505***

1,217.245***

2,222.705***(460.195)(228.415)(75.251)(107.959)(718.355)(404.403)(374.620)-775.500***-441.893***71.375*-296.501***-1,671.954***494.945***

Log of Hh.

6,714.206***

8,311.402***662.923***

343.729**

11,291.676***

3,268.817***

19,039.043***

Income(703.125)(365.069)(106.049)(163.407)(1,459.381)(1,268.396)(599.481)

1,753.174***

4,322.626***380.435***

235.437**

7,209.900***

1,329.136***

Treatment *9,756.816***-4,359.964***-140.719-829.715

592.205-203.461

439.560

income(2,168.721)(1,376.569)(189.158)(675.857)(1,830.196)(1,481.314)(2,115.435)

2,547.643***-2,267.547***-80.755-568.314

378.132-82.729-86,253.880***-70,423.439***-4,373.672***

3,362.525**-58,454.393***-22,479.502***-79,996.855***(6,085.750)(3,539.853)(697.497)(1,685.979)(11,630.900)(7,727.277)(5,350.793)

14,10914,10914,10914,10914,10914,10914,109Treatment

After

Constant

Observations
R-squared

0.250

F

17.48

49.12

4.03

5.6

12.52

1.14

64.49

Pseudo R2

0.03520.02850.00130.00170.00260.0005

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Hh. income
controls
Add. controls
Regioncontrols

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level16

reduce the positive impact of the treatment effect. Therefore, to accurately explain the labeling effectcaused by the CAS reform (Hener, 2017), as shown in Equation (3), we further control for householdincome ( 𝐻ℎ𝐼𝑛𝑐𝑖𝑡 ) and the interaction terms between logarithmic income and the treatment(𝐻ℎ𝐼𝑛𝑐𝑖𝑡 × 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 ).

𝐸𝑥𝑝𝑖𝑡 = 𝛼 + 𝛿(𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 × 𝐴𝑓𝑡𝑒𝑟𝑡 ) + 𝜕𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 + 𝛾𝐴𝑓𝑡𝑒𝑟𝑡 + 𝜌𝐻ℎ𝐼𝑛𝑐𝑖𝑡 + 𝜃(𝐻ℎ𝐼𝑛𝑐𝑖𝑡 ×(3)

𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑖 ) + 𝜡𝒊𝒕 𝜼 + 𝜏𝑅𝑒𝑔𝑖𝑜𝑛𝑖𝑡 + 𝜀𝑖𝑡

Table 5 presents the results of the treatment effect estimated by increasing the other controls forhousehold income. The coefficients are mostly the same as in Table 3 and are never statisticallysignificant. Families with junior high school students who received child allowances did not increase
their expenditure on average.

4.3 Income Heterogeneous Effects of the CAS Reform
We analyze the heterogeneity in the effects of CAS reform on consumption expenditures acrosshouseholds with different income groups to improve our understanding of households’ consumption
behavior. Avoiding child poverty is one of the main objectives of child allowances. In the 2012 Survey
on the Use of Child Allowance, respondents were asked about the purpose of child allowance. The results
showed that the lower the households’ annual income, the higher the proportion of child allowance used
for “the daily family expenses not limited to children” and for “children’s expenditures and entertainment
expenses” because recipients are not allowed to use the limited household income on children. Although
we do not depend on a theoretical model in our study, some empirical studies show that the lifecycle/permanent income hypothesis could fail to predict the impact of a predictable change in income(e.g., benefit payment) on household consumption expenditures. In other words, the household spending
response to anticipated income changes will change if families face liquidity constraints (Parker et al.,2013; Stephens & Unayama, 2015). Simultaneously, the theoretical hypothesis of “excess sensitivity” inhousehold consumption states that liquidity-constrained families or high-income consumers are sensitive
to government transfer payments (Kueng, 2018; Stephens & Unayama, 2019). Following Parker et al.
(2013), we use annual household income (before taxes) to identify households that may bedisproportionately likely to be liquidity-constrained. After pooling the dataset of the control andtreatment groups, we split the sample into five subsamples according to income quintile.
Each panel in Table 6 reports the estimates of the reform by households’ annual income quintiles
separately. The effects of the CAS reforms vary for the five groups of households with different yearly
income amounts. For the results of the lowest quintile group of the income distribution in Panel A, wefind a positive and significant treatment effect on each category of child-related consumption
17

expenditures (but not lesson expenses). Columns (1) and (3) show that the CAS reforms increased
expenditures on supplement by 1,358 yen, and on recreational goods by 593 yen. All coefficients are
statistically insignificant in the results for adult-related expenditures. For the second group of income
distribution, the coefficients lose their significance in each category. In the third group, the empiricalresults show that the CAS reform does not affect child-related consumer spending but decreases adultrelated spending (social expenses). The fourth and highest income distribution group shows the same
results as the second group.
The coefficient of food expenses is 7898 in the lowest quintile group of the income distribution,
which means that the treatment effect increased food spending by low-income families. Although theresult of food expenses was a placebo, we can deduce that child allowances improved children’s
nutritional status for liquidity-constrained families. The coefficient of food expenditure is 5868 in thethird group, which needs to be further explored.
Overall, the results suggest that the CAS reform can significantly increase children's various
expenditures and substantially impact children in the lowest quintile group of the income distribution
than those in other groups.

4.4 Parallel Trend
The critical identification assumption for the DID strategy is parallel trends. As the main aim of thisstudy is to test the child allowance labeling hypothesis, the parallel trend assumption requires thatchanges in the average consumption expenditures of households with and without junior high school
students follow a common trend before and after the CAS reforms, conditional on the observablecharacteristics. However, because we have only two periods of data, we cannot test the parallel trend
hypothesis directly for changes in average consumption expenditures in the control and treatment groups.
The earlier empirical results show that changes in the CAS increased the supplement fees for householdswith low-income children, so we use the percentage of students attending cram school or private schools,
and the private school enrollment rate, which are related to the cost of education, to check for a parallel
trend between the treatment and control groups. If an event before the CAS reform affected the cost of
education, then there would be no common trend in the data, such as private school enrollment rates,
between the two groups. It is reasonable to assume that the treatment and control groups would not violate
the counterfactual assumption if they had a common trend prior to the policy intervention.
Fig. 29 shows the trends in the percentage of students attending cram schools, using data from the
National Assessment of Academic Ability Study. The vertical lines indicate the trends before and after
the reform. Until 2010, the trend was that families with only junior high school students and families

9Affected by the Great East Japan Earthquake, data for 2011 are missing.
18

with only children under elementary school would attend cram schools. Figs. 3 and 4 show the same
trend in the number of private schools and the private school enrollment rate (private and junior highprivate schools) using data from the Basic School Survey. We believe that families with children underelementary school-age only are an appropriate control group for families with junior high school students
only.

Fig. 2 Trend in percentage of students attending cram school

70%

59.5%

63.8%

62.9%

62.1%

62.7%

48.8%

47.9%

47.9%

2008

2009

2010

60.2%

60.2%

60.8%

60.8%

61.3%

48.0%

50.0%

48.3%

47.7%

46.5%

46.7%

2012

2013

2014

2015

2016

2017

60%
50%
40%

45.3%

30%
20%
10%
0%
2007

Elementary School Students

Junior High School Students

Fig. 3 Trends in number of private school

900
800
700
600

729

735

745

758

763

766

771

777

774

776

775

200

206

210

213

216

220

221

222

227

230

231

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

500
400
300
200
100
0

Elementary School

Junior High School

19

Fig. 4 Trends in private school enrollment rate
10%
9%
8%
7%
6%

7.02%

7.16%

7.21%

7.18%

7.13%

7.07%

7.05%

7.01%

7.02%

7.09%

7.18%

1.05%

1.08%

1.11%

1.13%

1.15%

1.16%

1.17%

1.17%

1.18%

1.19%

1.20%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

5%
4%

3%
2%
1%
0%

Elementary School

5

Junior High School

Conclusion

This study examined the effect of 2010–2012 CAS reform in Japan on household expenditure using
nationally representative data (the NSFIE) to reveal whether child allowances have a labeling effect. The
2010–2012 child allowance reform (with the goal of supporting the healthy growth of children andpreventing poverty among children) expanded the upper age limit for eligible children from 12 to 15
years, and the child allowance was extended to junior high school students. We exploited the crosseligible group variation in the rollout of the CAS reform and applied a DID strategy to identify the causal
effects of the CAS reform. We found that the 2010–2012 child allowance reform had no significant effecton expenditure on child- and adult-related consumption on average. We also concluded that the treatment
effect significantly increased child-related expenditure on supplements and recreational goods in thelowest quintile group of the income distribution.
This study suggests that the child allowance in Japan as a labeled transfer significantly increases
the welfare of children, referring specifically to the welfare of children from relatively low-income
families. Although the estimated value of the empirical results is rather small, the “labeling effect”
characteristic of the “child allowance” cannot be denied. Considering that child-related consumption
expenditures with labeling effects are associated with children’s development (Naoi et al., 2021),
policymakers can formulate relevant “labeling” policies to target more vulnerable groups, such as
children from low-income families, to alleviate child poverty in Japan. In addition, when recipients
receive a subsidy in the form of cash, the use of the subsidy is not limited to consumption, and some may
choose to save the subsidy (Stephens & Unayama, 2015), but this is beyond the scope of this study andremains for future discussion.
20

Table 6 Robustness checks: Effects of the reform on household expenditures with additional controls
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures
Recreation
Supplement

(5)

(7)

Adult-assignable consumption expenditures
Food

Alcohol andLessonSocialgoods(6)Luxury goods

tobaccoPanel A: Lowest Quintile Group of the Income Distribution
Effect8,174.035**

2,391.008

592.626*-1,068.037

3,581.152-929.170

7,898.440*(3,644.667)(2,412.272)(331.507)(1,445.359)(2,732.424)(4,118.530)(4,168.778)

1,357.973**

792.146332.947*-713.096

2,376.893-353.984-17,375.881-10,771.884-170.570

2,145.462

26,020.829-56,337.048

4,835.444(21,573.831)(24,374.265)(2,634.900)(11,391.378)(18,188.403)(40,172.247)(29,928.179)-2,886.698-3,568.750-95.829

1,432.460

17,270.621-21,462.577-1,877.872***-1,275.553***-159.150-95.926-1,823.495***

1,953.123

1,657.258**(695.719)(493.367)(107.141)(259.158)(391.585)(1,611.256)(719.866)-311.976***-422.594***-89.413-64.047-1,210.295***

744.076

Log of Hh.

5,486.568***

5,274.841***135.987

267.2444,853.916***

4,684.467**

7,596.606***

Income(1,533.924)(1,093.153)(161.588)(449.145)(695.321)(2,239.809)(1,459.435)

911.497***

1,747.567***

76.400178.4313,221.656***

1,784.629**

Treatment *3,041.054

715.834-64.105-79.724-4,458.411

9,503.253

8.761

income(3,678.451)(4,207.129)(445.063)(1,922.933)(3,103.752)(6,850.365)(5,185.054)

505.218

237.157-36.015-53.229-2,959.150

3,620.429-56,506.749***-48,439.615***-1,582.404*

3,726.213-19,494.589***-27,925.681**-21,017.789**(9,763.192)(6,931.446)(893.423)(2,719.241)(4,392.202)(11,718.253)(9,407.699)

2,723

2,723

2,723

2,723

2,723

2,723

2,723

Treatment

After

Constant

Observations
R-squared

0.172

F

7.46

6.43

2.29

2.01

3.28

0.32

8.56

Pseudo R2

0.04690.02840.00270.00310.00460.0014

controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Add. controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Hh. income

Regioncontrols

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level
21

Table 6 Robustness checks: Effects of the reform on household expenditures with additional controls (continued)
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures

(6)

(7)

Adult-assignable consumption expenditures

Recreation
Supplement

(5)

Food

Alcohol andLessonSocialgoods

Luxury goods

tobaccoPanel B: Second Quintile Group of the Income Distribution
Effect-4,836.990

1,449.230

64.9091,624.163-555.842-570.971-3,437.675(3,116.916)(2,080.417)(380.241)(1,734.448)(1,790.949)(1,387.479)(3,731.459)-1,074.686

686.33636.886

1,083.640-404.164-241.297-67,994.801

71,634.621

153.942

35,288.448-144,003.586*

50,563.963

224,853.106(143,593.386)(96,507.282)(14,049.084)(61,892.897)(77,780.044)(60,361.750)(176,777.805)-15,107.130

33,925.204

87.481

23,544.411-104,708.032*

21,368.762-1,227.537*-668.880

179.096-902.408***-1,193.254***

1,046.526*

2,028.722***(678.214)(418.637)(156.142)(242.468)(428.578)(611.901)(761.927)-272.735*-316.773

101.775-602.085***-867.640***442.271*

Log of Hh.

-3,120.236

6,188.332**

1,124.355-1,089.339

8,216.521***-1,367.963

20,195.548***

Income(4,875.305)(3,089.376)(1,167.357)(1,736.524)(3,112.901)(2,981.989)(5,464.524)-693.256

2,930.712**

638.938-726.806

5,974.405***-578.113

Treatment *12,547.080-12,981.779-23.670-5,233.886

23,480.231*-8,280.147-36,120.897

income(23,489.737)(15,764.300)(2,264.052)(10,071.660)(12,707.581)(9,826.604)(28,780.298)

2,787.719-6,147.998-13.451-3,492.043

17,072.969*-3,499.261-7,036.982-57,175.909***-6,083.165

7,680.504-41,954.831**

9,375.662-87,084.221**(30,116.447)(19,323.003)(6,824.129)(10,462.138)(19,071.681)(17,470.800)(33,858.677)

2,902

2,902

2,902

2,902

2,902

2,902

2,902

Treatment

After

Constant

Observations
R-squared

0.141

F

4.8

9.65

1.93

2.34

2.59

0.65

6.83

Pseudo R2

0.03520.02330.00140.00340.003

0.0017

controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Add. controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Hh. income

Regioncontrols

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level
22

Table 6 Robustness checks: Effects of the reform on household expenditures with additional controls (continued)
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures
Recreation
Supplement

(5)

(7)

Adult-assignable consumption expenditures
Food

Alcohol andLessonSocialgoods(6)Luxury goods

tobaccoPanel C: Third Quintile Group of the Income Distribution
Effect

1,546.210

124.104-74.343-516.384-4,141.319**-3,184.257-5,868.484*(3,066.023)(2,106.783)(196.854)(912.784)(2,074.533)(2,405.230)(3,124.072)

410.205

68.632-47.479-357.805-3,116.407**-1,308.308-88,816.877-20,585.064

10,395.407-42,581.299-9,474.555

194,984.360

73,615.430(170,724.228)(116,071.029)(10,452.053)(45,076.453)(111,332.293)(135,493.448)(157,724.895)-23,562.832-11,383.915

6,639.011-29,504.741-7,129.749

80,112.758-1,514.785**-837.273*-7.793-203.109-1,896.545***782.568

1,919.246**(770.205)(435.723)(93.517)(217.364)(453.445)(641.072)(787.579)-401.868**-463.027*-4.977-140.735-1,427.180***

321.532

Log of Hh.

3,163.645

2,851.816

639.123

2,652.305

13,506.362***

22,416.845*

26,687.708***

Income(6,390.962)(3,650.349)(706.763)(1,833.069)(3,747.776)(12,218.020)(6,616.464)

839.305

1,577.106

408.175

1,837.792

10,163.746***

9,210.356*

Treatment *14,417.789

2,375.236-1,723.831

6,781.207

1,936.417-30,676.772-11,291.596

income(26,917.200)(18,329.460)(1,646.551)(7,114.041)(17,514.319)(21,310.871)(24,907.506)

3,824.993

1,313.549-1,100.922

4,698.723

1,457.184-12,604.092-56,632.904-35,335.747-5,610.599-9,407.899-75,346.561***-135,480.710*-102,672.395**(40,909.290)(24,378.307)(4,882.760)(11,692.277)(23,609.779)(70,559.814)(42,948.739)

3,010

3,010

3,010

3,010

3,010

3,010

3,010

Treatment

After

Constant

Observations
R-squared

0.134

F

5.98

17.95

1.95

2.54

2.69

0.44

7.3

Pseudo R2

0.03590.02110.00180.00340.00250.0016

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Hh. income
controls
Add. controls
Regioncontrols

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level23

Table 6 Robustness checks: Effects of the reform on household expenditures with additional controls (continued)
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures
Recreation
Supplement

(5)

(7)

Adult-assignable consumption expenditures
Food

Alcohol andLessonSocialgoods(6)Luxury goods

tobaccoPanel D: Fourth Quintile Group of the Income Distribution
Effect

1,041.982

821.663284.813735.418-583.310-1,537.401

2,450.597(3,643.531)(1,874.925)(334.967)(1,009.821)(1,784.628)(1,116.912)(3,318.693)

319.471505.221168.363508.002-442.050-737.880

38,626.371

86,864.646

36,824.859**

20,100.081-182,437.320**-59,744.159-17,936.091(199,352.987)(107,421.468)(18,565.767)(59,398.575)(90,043.562)(82,441.883)(185,379.409)

11,842.820

53,410.961

21,768.512**

13,884.454-138,256.303**-28,674.368-6,203.834***-577.442

123.205-688.736***-1,816.052***

940.009***2,565.771***(1,095.805)(515.376)(174.696)(239.819)(545.975)(320.241)(881.989)-1,902.092***-355.055

72.831-475.756***-1,376.257***

451.160***

Log of Hh.

8,896.734

5,951.945

1,807.389

1,127.769

14,031.525***-155.992

34,988.053***

Income(8,625.715)(4,236.645)(1,717.549)(1,996.449)(4,384.482)(2,268.602)(7,276.247)

2,727.733

3,659.707

1,068.413

779.025

10,633.497***-74.869

Treatment *-4,955.847-14,736.973-5,741.579**-2,989.558

27,963.741**

9,325.734

3,096.997

income(30,504.101)(16,440.153)(2,866.948)(9,084.357)(13,766.151)(12,705.515)(28,392.270)-1,519.459-9,061.407-3,394.056**-2,065.085

21,191.736**

4,475.911-120,421.686**-60,341.706**-12,154.714-6,992.259-81,182.349***-5,809.258-200,242.465***(57,369.009)(28,258.567)(11,602.280)(13,113.749)(29,161.094)(15,875.806)(47,784.758)

2,781

2,781

2,781

2,781

2,781

2,781

2,781

Treatment

After

Constant

Observations
R-squared

0.128

F

4.9

12.31

1.69

1.62

1.99

0.93

6.23

Pseudo R2

0.03120.02350.00150.00210.00220.0021

controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Add. controls

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Hh. income

Regioncontrols

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level24

Table 6 Robustness checks: Effects of the reform on household expenditures with additional controls (continued)
(1)

(2)

(3)

(4)

Child-assignable consumption expenditures
Recreation
Supplement

(5)

(7)

Adult-assignable consumption expenditures
Food

Alcohol andLessonSocialgoods(6)Luxury goods

tobaccoPanel E: Highest Quintile Group of the Income Distribution
Effect100.734

119.896230.463-1,315.267-2,192.523-135.348-5,001.591(3,649.738)(2,032.959)(390.389)(800.979)(2,704.120)(2,683.845)(3,193.450)

36.58677.017132.212-930.201-1,360.448-56.586

30,432.041-28,988.851-5,498.223

8,430.125-88,177.559

57,304.922-22,187.543(66,858.344)(48,401.440)(8,305.882)(15,226.585)(59,565.049)(67,078.352)(58,821.211)

11,052.642-18,621.499-3,154.229

5,962.066-54,713.687

23,957.715-2,048.411-485.834

561.234*-193.118-4,846.522*-418.264

3,037.585***(1,264.007)(588.090)(297.556)(252.616)(2,630.396)(1,013.404)(1,052.078)-743.964-312.084

321.970*-136.579-3,007.240**-174.865

Log of Hh.

15,986.780***

8,337.246***571.7902,359.290**

13,187.195***

13,371.402

28,214.489***

Income(4,601.988)(2,249.692)(898.754)(924.193)(4,057.968)(8,533.341)(3,963.832)

5,806.254***

5,355.577***

328.025

1,668.568**

8,182.582***5,590.240

Treatment *-2,235.673

2,666.697

776.740-1,241.215

12,512.690-8,362.348

3,798.780

income(9,766.748)(7,152.933)(1,216.480)(2,231.531)(8,588.506)(9,755.972)(8,585.156)-811.976

1,713.000

445.602-877.829

7,764.055-3,496.083-164,924.014***-76,327.940***-5,487.859-9,588.023-88,862.571***-99,727.216*-160,246.109***(31,058.564)(15,120.794)(6,453.014)(6,193.751)(21,481.051)(54,979.250)(26,492.677)

2,693

2,693

2,693

2,693

2,693

2,693

2,693

Treatment

After

Constant

Observations
R-squared

0.154

F

6.42

12.39

1.58

2.02

2.23

0.53

7.44

Pseudo R2

0.02620.022

0.00190.00280.00280.0013

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Hh. income
controls
Add.
controls
Regioncontrols

NOTE: * Significant at the 1% level; ** Significant at the 5% level; *** Significant at the 10% level

25References
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28

Declarations
Funding
This study was supported by JSPS KAKENHI under Grant Number JP18K12796.
Availability of data and material
The individual data of the Japan National Survey of Family Income and Expenditure used in thisstudy may be obtained through the Statistics Bureau of the Ministry of Internal Affairs andCommunications for research purposes.
Code availability
The Stata code used in this study can be provided upon request to the corresponding author.
Conflicts of interest/Competing interests
The authors have no conflicts of interest to declare that are relevant to the content of this article.
Authors' contributions
All authors contributed to the study conception and design. Material preparation, data collection, andanalysis were performed by Ms. Huihui LI and Ms. Minae NIKI. The first draft of the manuscript was
written by Ms. Huihui LI and all authors commented on previous versions of the manuscript. All authors
read and approved the final manuscript.

29

Appendix 1 CAS Income cap
Income cap
Number of dependent relatives (Examples inparentheses)

Pre-tax income
After-tax income threshold（JPY, Thousand）

threshold（JPY,
Thousand）

0（for families with no child born at the end
6220

8333

6600

8756

6980

9178

7360

9600

7740

10021

8120

10421

of the previous year, etc.）
1（for families with one child, etc.）
2（for families with a parent and one child,etc.）
3（for families with a parent and twochildren, etc.）
4（for families with a parent and threechildren, etc.）
5（for families with a parent and fourchildren, etc.）
Note: 1. “Parent” in the “Number of dependent relatives” column refers to spouses with an annual pre-tax income of 1,030
thousand yen or less. 2. The maximum number of dependent relatives is five in our dataset, so we show up to five dependents.

30