The child support "tax" : determining the effect of child support on the income growth of noncustodial parents
Date of Award
Master of Science (MS)
Economics & Finance
Lee, Kwan Y.
Flynn, David T.
Goenner, Cullen F.
This study examines the role of child support in determining income growth. Using an Ordinary Least Squares (OLS) model with state-level fixed effects applied to panel data from the National Study of Families and Households (NSFH), I find that having a legal agreement to pay child support has a significant and negative effect on the income growth of the noncustodial parent. Specifically, after controlling for demographic variables and the respondent’s economic circumstances in the initial time period, the OLS model with state-level fixed effects finds that having a child support obligation is associated with a 17.73 percentage point decrease in income growth over a five year period relative to a respondent without a child support obligation. For the average respondent in the study sample, this amounts to nearly an 82 percent decline in income growth attributable to having a legal agreement to provide child support over the five year study period. The results are found to be robust across alternative specifications and samples. Whereas past studies using panel data have found little to no effect of child support on income growth and labor supply, this study is unique in that it finds a large, negative effect of child support on the income growth of the noncustodial parent at the individual level. These results emphasize that policymakers should carefully consider the dynamic effect of the child support structure on the economic behavior of the noncustodial parent.
Snook, Jesse, "The child support "tax" : determining the effect of child support on the income growth of noncustodial parents" (2015). Theses and Dissertations. 711.