Visitations and Transfers After Divorce

Recent research reveals that divorce negatively impacts children's welfare as a consequence of the reduction in monetary and time contributions of the non-custodial parent. After divorce, the variables that link the absent parent to the child are visitations, child support transfers, and direct expenditures the non-custodial parent makes on the child. In our framework parents constitute a bilateral exchange economy where the mother is endowed with control over visitations and the father has control over financial resources. We use data from National Longitudinal Study of the High School Class of 1972 (5th follow up) to estimate the parameters of the model. We then use the estimates to simulate the effects of alternative endowment levels (such as joint custody) on the proportion of time spent with the non-custodial parent and the ex post parental income distribution. The results indicate that an endowment of equal time for both parents, reducing time under the mother's control implies a reduction in the child support transfers from the father, and, therefore, a loss in the mother's consumption levels. However, a more equally shared time with the children also increases the father's direct expenditures on the child, with the effect of allowing the mother to spend less on child goods and partially compensate her consumption loss. Copyright Kluwer Academic Publishers 2003