Intergenerational Welfare Dependence? Causal Evidence from Australia’s Vietnam-era Draft Lotteries

Our primary aim is to estimate causal intergenerational effects of welfare receipt, in the context of veterans’ pensions. We leverage Australia’s Vietnam-era military draft lotteries for identification, drawing on 31 years of intergenerationally-linked administrative (tax) data, covering the universe of the Australian population. We make three contributions. First, we reaffirm that deployed service had huge lifetime disemployment and welfare receipt effects for Australian veterans, as well as their spouses. Second, we contribute to the new literature on intergenerational effects of military service. Despite high statistical power, we find few significant effects on child outcomes, including employment, income, partnering and parenting. We do find a small effect on welfare receipt around ages 15-21, which seems mechanically explained by eligibility rules, and a small effect on sons’ employment in protective services, suggesting occupational transmission. Thirdly, we estimate causal intergenerational welfare persistence, finding precise zeros, highlighting that welfare receipt does not always spill over to the next generation.

Dr Nathan Deutscher is a Senior Lecturer at the University of Technology Sydney, and a Visiting Fellow at the Tax and Transfer Policy Institute, at the Australian National University.  His research covers a variety of topics in labour economics and applied microeconometrics.  Over the course of his PhD – supported by a Sir Roland Wilson scholarship – he worked with the Australian Taxation Office to produce Australia’s first intergenerational tax dataset.  His research has since been published in leading general interest and field journals, including the Journal of Economic Literature, American Economic Journal: Applied Economics, Journal of Public Economics, Labour Economicsand in Australia’s leading economics journal, the Economic Record.  He also holds an appointment at the Department of the Treasury in the Australian Government, leading a data strategy and analytics team. Past roles include two years providing advice on tax and transfer policy in the Treasurer’s Office.