A STACKELBERG MODEL OF CHILD SUPPORT AND WELFARE

This article models the child support and welfare decisions of never‐married parents on welfare as a Stackelberg game. The mother chooses whether to exit welfare, report paternity, and to obtain a formal child support order. If a child support order is obtained, the father chooses whether to comply with the order. Simulation results from the structural parameters indicate that increasing the child support disregard increases paternal compliance slightly and affects maternal paternity reporting more significantly; effects are limited, however, by low paternal incomes. Results also indicate that high award amounts can decrease expected child support payments to women on welfare.