Brief Children's Savings Accounts: Why Design Matters
Barbara Butrica, Adam Carasso, C. Eugene Steuerle, Desmond Toohey
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One way to achieve an ownership society is to endow all children with savings accounts starting at birth. This report shows that specific design features of a children's savings account program will impact the distribution of wealth. For example, non-taxability of account earnings distributes significantly more benefits to higher-income groups than to lower-income groups. Also, because many families experience mobility over their lifetimes, a significant portion of benefits conditioned on low annual income will accrue to middle- and higher-income families. Regardless, these accounts could be important in getting children banked and teaching them the value of saving and compound interest.
Research Areas Economic mobility and inequality Children and youth Families Race and equity Wealth and financial well-being
Tags Economic well-being Racial and ethnic disparities Income and wealth distribution Racial inequities in economic mobility Racial wealth gap Financial stability