New parents often face significant financial challenges during the first few months after the birth or adoption of a child. The cost of providing for a newborn can quickly add up, from expenses associated with medical care such as prenatal care, delivery fees, and pediatric visits, to the need for full-time care and time off work. These costs can place a significant burden on families, regardless of their family structure.

Fortunately, research has shown that providing direct financial support to parents can help reverse some of the negative outcomes associated with poverty at a young age. One study found that a one-time $1,000 transfer to low-income households decreases referrals to Child Protective Services (CPS) and reduces the likelihood of a child spending time in foster care. Another study found that one-time payments to new parents leads to significant improvements in children's test scores, as well as increased future income for both the parent and child. These observed effects on child earnings alone are large enough that the transfer pays for itself through subsequent increases in income tax revenue. Providing direct financial support to parents not only improves the immediate well-being of children and families, but also has long-term benefits for the economy as a whole.