The Impact of Changes in Child Support Policy

This paper measures the impact of child support reforms on payments to divorced mothers and welfare participation rates among them. A Stackelberg model of divorced parents' behavior is calibrated to data from Wisconsin, where child support payments increased from $2,175.35 to $3,431.77 and welfare participation rates decreased from 33.5% to 9% between 1981 and 1992. Results show that new guidelines accounted for 24.4% and improved enforcement for 74% of the increase in payments. Higher payments accounted for a 3.9-percentage-point decline, decreasing welfare benefits an 8.4-percentage-point decline, and the two combined a 15-percentage-point decline in the welfare participation rate.