Funded on January 15, 2023

Baby bonds are publicly funded child trust accounts that have been proposed as a solution to build wealth for young adults and reduce racial wealth disparities. Public support for baby bonds is gaining momentum, including federal legislation introduced by Senator Booker (D-NJ) and reintroduced by Senator Booker and Representative Pressley (D-MA). At the state and local levels, Connecticut was the first to enact baby bonds legislation in 2021, followed by Washington, DC, the same year. California’s 2022–23 budget included $100 million in funding for targeted baby bonds for children who are in long-term foster care or who lost a parent or primary caregiver to COVID-19. Baby bonds legislation has also been introduced in Delaware, Iowa, Massachusetts, Nevada, New Jersey, New York, Washington, Wisconsin, and North Carolina. Louisiana also passed legislation in June 2022 creating a task force to study the potential impacts of baby bonds in the state. Thus far, each jurisdiction has different policy designs—including eligibility criteria, seed deposit and continued deposit amounts, and allowed uses of funds.  

Research is needed on how these policy iterations of baby bonds could help the implementation of the policies and to help other jurisdictions make design decisions. Traditional evaluations in the field are also needed, but as these programs will take 18 years, we will not have results early enough to affect real-time design.  

Scholars at the Urban Institute will conduct a literature review of projections for baby bonds and more-robust studies of similar policies like child savings accounts, individual development accounts, and 529s. Through this literature review, Urban scholars will describe the possible impact of this early life investment on the asset position of families of color and the reduction in the racial wealth gap. The research will also investigate other side benefits of baby bonds beyond their intent, such as improved health outcomes. The findings from this research will inform efforts to model different interventions on wealth and other economic outcomes. 

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