Nathan Deutscher, University of Technology Sydney - Intergenerational Welfare Dependence?

Title:   Intergenerational Welfare Dependence? Causal Evidence from Australia’s Vietnam-era Draft Lotteries
Nathan Deutscher and Peter Siminski, University of Technology Sydney

Abstract: We contribute to understanding the reasons for causal intergenerational welfare persistence. We study veterans’ pensions, leveraging Australia’s Vietnam-era draft lotteries for identification. Using 31 years of administrative data with universal coverage, we start by estimating long-run effects of service for veterans and their families. Deployed service increased welfare receipt by 7 years on average, reduced employment (3 years) and reduced poverty incidence (4 years), with veterans' pensions the likely explanation. Effects for veterans' wives were qualitatively similar and approximately half as large. As a result, their children were more exposed to parental welfare receipt and less exposed to poverty during childhood. Despite high statistical power, we find almost no effects on child outcomes, including employment, income, partnering and parenting. We find a small increase in child welfare receipt at ages 15–21, mechanically explained by eligibility rules, and some occupational transmission into protective services employment among sons. Finally, we estimate causal intergenerational welfare persistence under the strong assumption that parental welfare receipt is the only channel through which draft eligibility affected children’s welfare receipt. Violations of this assumption are likely to bias estimates upwards. Our estimates are nevertheless precise zeros, highlighting that welfare receipt does not always spill over to the next generation.

Presenter: Nathan Deutscher, University of Technology Sydney

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