Child support is a critical source of income, especially for the growing proportion of children born to unmarried mothers. Current social policy supports custodial parent employment (e.g. the EITC and other work supports have largely taken the place of an entitlement to cash assistance for single mothers of young children). But given many single mothers’ limited earnings potential, child support from noncustodial fathers is also important. This raises questions about the effects of child support on custodial mothers’ labor supply, and whether policies that increase child support receipt will thereby discourage mothers’ employment. This paper addresses these questions, taking advantage of data from a randomized experiment conducted in the state of Wisconsin.

All else equal, microeconomic theory suggests that non-labor income such as child support will reduce labor supply. Early empirical studies supported this prediction. However, the endogeneity between child support receipt and mother’s labor supply was not explicitly addressed in this literature. The purpose of this paper is to address this question using survey data from a randomized experiment conducted in the state of Wisconsin. Custodial mothers transitioning from AFDC to TANF and new entrants to TANF were randomly assigned to experimental or control groups. The experimental group received the full amount paid by the noncustodial father while the control group received a partial pass through of child support (i.e. $50 per month or 41 percent of the amount paid, whichever was larger) (N=2,159). We study the extent to which child support receipt reduce the likelihood of work for pay and hours worked among custodial mothers participating in TANF. Unlike previous research in this area, we do not find any negative effect of child support on the likelihood to work for pay or the number of hours worked in a given week. This suggests that efforts to pursue noncustodial father’s contributions and increase the regularity of total income received by custodial mothers are not likely to reduce mothers’ labor supply. Major reforms to social welfare policies in the U.S. have been focused on increasing custodial mothers’ labor supply and child support collections. Our results suggest that these policies are not necessarily at cross purposes; in this regard, efforts to increase the labor supply of both parents are compatible.