Child Support and Income Inequality

Abstract

Child support contributes to many custodial‐mother families’ income, yet there are persistent concerns that many noncustodial fathers have low‐wage, unstable jobs that limit their ability to pay child support. Thus, child support may exacerbate inequality—that is, it may transfer resources from a low‐income noncustodial father to a custodial‐mother family that is already better off. These arguments, however, are generally made without reference to couple‐level data. This study uses multiple sources of Wisconsin administrative data to construct measures of income, including earnings, public transfers, and tax liabilities and benefits, on matched pairs of custodial and noncustodial parents and provides evidence on the role of child support in equalizing income between them. Findings show that for divorced couples, fathers are substantially better off than custodial mothers in pre‐tax/transfer income. Taxes and transfers reduce fathers’ relative advantages, and child support equalizes incomes between fathers and mothers. For never‐married couples, fathers have a slight advantage in pre‐tax/transfer income. Fathers’ relative advantage disappears after taxes and transfers; mothers are likely to be better off when measured by post–child support income, even after adjusting for the costs of children. These findings provide contexts relevant to implementation of the new federal child support regulations, finalized in 2016.

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