The effect of quarantining welfare on school attendance in indigenous communities

We identify the causal impact of quarantining welfare payments on Aboriginal children’s school attendance by exploiting exogenous variation in its rollout across communities. We find that income quarantining reduced attendance by 4.7 percent on average in the first five months. Attendance eventually returned to its initial level, but never improved. The attendance penalty does not operate through changes in student enrollments, geographic mobility, or other policy initiatives. Instead, we demonstrate that financial disruption may be responsible for the temporary reduction in school attendance. Supplemental analysis suggests that the policy rollout may have increased family discord.