Keynes, family allowances, and Keynesian economic policy

Abstract

This paper provides a short history of family allowances and documents the fact that Keynes supported family allowances as early as the 1920s, continuing through the 1930s and early 1940s. Keynes saw this policy as a way to help households raise their children and also as a way to increase consumption without reducing business investment. The paper goes on to argue that a policy of family allowances is consistent with Keynesian economics. Finally, the paper uses the Luxembourg Income Study to estimate the impact of family allowances on child poverty in several developed nations and estimates the poverty-reducing impact of several possible family allowance programs for the US.