The Impact of Child Support on the Household Income and Labour Supply of Payee Lone Mothers

Abstract

One objective of child support schemes is to reduce the reliance of lone parents on government transfers. I estimate the effect of receiving child support on the household income and labour market activity of payee lone mothers in Australia. I use variation in the amount of child support received driven by the employment status of the paying parent, and find that receiving any child support reduces government transfers, increases labour force participation, and increases household income in excess of the amount of child support received. Increasing the amount of child support received does not decrease the employment rate or hours worked of lone mothers.

The Dynamics of Family Formation and Dissolution

“…Thus the paper finds that when received, child support plays a key role in reducing the poverty experienced by children living in the poorest lone-mother-headed households. Fisher (2017) used longitudinal data to estimate the effect of receiving a higher level of child support on women's household income and labour-force participation. The results provide no evidence of negative labour market activity effects from child support receipt for payee lone mothers because family tax benefits paid by the government are removed or scaled back when child support is paid.…”