Separation, child-support and well-being in Uruguay

There is scarce quantitative evidence on the well-being effects of separation and divorce, and the specific role of child support payments in Latin American countries, due to the paucity of longitudinal data. This article contributes to fill this gap by analyzing the impact of family breakdown and child support in Uruguay on a wide set of household and child outcomes, based on two waves of a longitudinal study (Estudio Longitudinal del Bienestar en Uruguay), that follows-up children that were first graders at public primary schools in 2004. We restrict our study to households composed by married or cohabiting couples in the baseline (2004). The effect is estimated using a combined difference in difference- PSM method. Our main findings show that separation entails a significant per capita household income loss (12%) and increases deprivation in terms of income poverty and access to durable goods, for custodial mothers. However, the income fall is partially mitigated by paternal child support payments, public transfers, changes in living arrangements and behavioral responses among mothers, whose labor earnings increase significantly after separation. Meanwhile, separation seems to worsen child educational outcomes, particularly grade repetition. However, this disadvantage vanishes for those children receiving transfers from non co-resident fathers.