Does Debt Discourage Employment and Payment of Child Support? Evidence from a Natural Experiment.

Despite substantial technological improvements to the child support enforcement program, many single parents do not receive child support. Particularly for families whose incomes are below the poverty level, child support is frequently a vital financial resource. The federal government's primary motivation for establishing the federal Child Support Enforcement (CSE) program was to recover the costs associated with public assistance payments to poor single-parent families by collecting payments from the noncustodial parents. In this study, we use variation in the birthing costs over time and across counties in Wisconsin to identify the effect of child support debt on nonresident fathers' child support payments and formal earnings. Our results suggest that higher arrears, in themselves, substantially reduce both child support payments and formal earnings for the fathers and families that already likely struggle in securing steady employment and coping with economic disadvantage, a serious unintended consequence of child support policy. (Author abstract)