Brief The State of Baby Bonds
Madeline Brown, Ofronama Biu, Catherine Harvey, Trina R. Shanks
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Baby bonds are universal, publicly funded child trust accounts. When recipients reach adulthood, they can use the funds for wealth-building activities such as purchasing a home, investing in education, or starting a small business. Baby bonds are intended to decrease wealth inequities—and specifically close racial wealth disparities, given that Black, Latinx, and Indigenous children are more likely to belong to lower-wealth households as a result of structural racism. As of February 2023, baby bonds proposals have passed in Washington, DC, Connecticut, and California and been introduced at the federal level and in eight additional states. In this brief, we revisit the policy as originally proposed, provide a legislative update, and outline six design features that would help baby bonds deliver on the promise of reducing racial wealth inequities: (1) universal eligibility and automatic enrollment, (2) financial progressivity, (3) flexible use of funds, (4) public funding, (5) substantial endowments, and (6) individual account holders.

Research Areas Wealth and financial well-being Race and equity Children and youth Economic mobility and inequality Families Greater DC
Tags Asset and debts Black/African American communities Children's health and development Race, gender, class, and ethnicity Economic well-being Racial inequities in economic mobility Wealth gap Wealth inequality Income and wealth distribution Racial wealth gap
Policy Centers Research to Action Lab Income and Benefits Policy Center
States California District of Columbia Washington Massachusetts Wisconsin Iowa New Jersey New York Connecticut Delaware Nevada
Cities Washington-Arlington-Alexandria, DC-VA-MD-WV