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Unintended consequences of welfare reform for children with single parents: a theoretical analysis

  • Francesconi, Marco
  • Rainer, Helmut
  • Klaauw,

This paper formulates a model to examine the effects of changes in tax-benefit policy on the behavior of divorced parents and the well-being of children in single-parent households. Noncustodial parents choose the level of a child support payment to transfer to custodians. These, in turn, decide over child good expenditures and the allocation of time between market work and parenting. Our main finding shows that welfare policies that subsidize childcare expenditures or reduce withdrawal rates, which are most certainly intended to improve the conditions of working single parents and their children, could actually have the reverse effect.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 20333.

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Date of creation: 2013
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Publication status: Published in Review of Economics of the Household (2013): pp. 1-25
Handle: RePEc:lmu:muenar:20333
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  1. Chris M. Herbst & Erdal Tekin, 2008. "Child Care Subsidies and Child Development," NBER Working Papers 14474, National Bureau of Economic Research, Inc.
  2. Marianne Bitler & Jonah Gelbach & Hilary Hoynes, 2004. "Welfare Reform and Health," NBER Working Papers 10549, National Bureau of Economic Research, Inc.
  3. Del Boca, Daniela & Flinn, Christopher J, 1995. "Rationalizing Child-Support Decisions," American Economic Review, American Economic Association, vol. 85(5), pages 1241-62, December.
  4. Paul Gregg & Susan Harkness & Sarah Smith, 2009. "Welfare Reform and Lone Parents in the UK," Economic Journal, Royal Economic Society, vol. 119(535), pages F38-F65, 02.
  5. Marco Francesconi & Helmut Rainer & Wilbert van der Klaauw, 2007. "The Effects of In-Work Benefit Reform in Britain on Couples: Theory and Evidence," CRIEFF Discussion Papers 0709, Centre for Research into Industry, Enterprise, Finance and the Firm.
  6. Bernal, Raquel & Keane, Michael P., 2010. "Quasi-structural estimation of a model of childcare choices and child cognitive ability production," Journal of Econometrics, Elsevier, vol. 156(1), pages 164-189, May.
  7. Francesconi, Marco & Rainer, Helmut & Van Der Klaauw, Wilbert, 2008. "Unintended Consequences of Welfare Reform: The Case of Divorced Parents," CEPR Discussion Papers 7107, C.E.P.R. Discussion Papers.
  8. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes & Madeline Zavodny, 2004. "The Impact of Welfare Reform on Marriage and Divorce," Working Papers 110, RAND Corporation.
  9. Yoram Weiss & Robert J. Willis, . "Transfers Among Divorced Couples: Evidence and Interpretation," University of Chicago - Population Research Center 90-4a, Chicago - Population Research Center.
  10. Liu, Haiyong & Mroz, Thomas A. & van der Klaauw, Wilbert, 2010. "Maternal employment, migration, and child development," Journal of Econometrics, Elsevier, vol. 156(1), pages 212-228, May.
  11. Marco Francesconi & Wilbert van der Klaauw, 2007. "The Socioeconomic Consequences of "In-Work" Benefit Reform for British Lone Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
  12. Ermisch, John & Pronzato, Chiara, 2006. "Intra-household allocation of resources: inferences from non-resident fathers' child support payments," ISER Working Paper Series 2006-57, Institute for Social and Economic Research.
  13. Michael Baker & Jonathan Gruber & Kevin Milligan, 2005. "Universal Childcare, Maternal Labor Supply, and Family Well-Being," NBER Working Papers 11832, National Bureau of Economic Research, Inc.
  14. Shelly Lundberg & Robert A. Pollak, 2001. "Efficiency in Marriage," NBER Working Papers 8642, National Bureau of Economic Research, Inc.
  15. Mike Brewer & Marco Francesconi & Paul Gregg & Jeffrey Grogger, 2009. "Feature: In-work Benefit Reform in a Cross-National Perspective - Introduction," Economic Journal, Royal Economic Society, vol. 119(535), pages F1-F14, 02.
  16. Blundell, Richard & Brewer, Mike & Francesconi, Marco, 2007. "Job Changes and Hours Changes: Understanding the Path of Labour Supply Adjustment," IZA Discussion Papers 3044, Institute for the Study of Labor (IZA).
  17. Jeffrey Grogger & LynnA. Karoly, 2009. "The Effects of Work-Conditioned Transfers on Marriage and Child Well-Being: A Review," Economic Journal, Royal Economic Society, vol. 119(535), pages F15-F37, 02.
  18. Flinn, C.J., 1998. "Modes of Interaction Between Divorced Parents," Working Papers 98-04, C.V. Starr Center for Applied Economics, New York University.
  19. Konrad, Kai A & Lommerud, Kjell Erik, 1995. " Family Policy with Non-cooperative Families," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 581-601, December.
  20. Marianne E. Page & Ann Huff Stevens, 2004. "The Economic Consequences of Absent Parents," Journal of Human Resources, University of Wisconsin Press, vol. 39(1).
  21. Ian Walker & Yu Zhu, 2006. "Child Support and Partnership Dissolution," Economic Journal, Royal Economic Society, vol. 116(510), pages C93-C109, 03.
  22. V. Joseph Hotz, 2003. "The Earned Income Tax Credit," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 141-198 National Bureau of Economic Research, Inc.
  23. Martin Halla, 2013. "The Effect Of Joint Custody On Family Outcomes," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 278-315, 04.
  24. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August.
  25. Weiss, Yoram & Willis, Robert J, 1985. "Children as Collective Goods and Divorce Settlements," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 268-92, July.
  26. Samara Gunter, 2013. "Effects of child support pass-through and disregard policies on in-kind child support," Review of Economics of the Household, Springer, vol. 11(2), pages 193-209, June.
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