Association for Public Policy Analysis & Management

Governments around the world concerned about the economic vulnerability of single-parent families can look to non-resident parents to provide more income through child support payments, or look to the state to provide more income through a variety of social benefit payments (welfare), or both. Some countries might view child support and welfare as substitutes, so that children who receive more from a non-resident parent will receive less from the state. This substitution approach could be attractive to countries trying to limit public costs. An alternative position treats welfare and child support as complements, with systems designed to enable parents to combine these sources. This complementarity may be an attractive strategy for governments looking to decrease child poverty. However, we currently know very little about the approaches different countries take.

In this paper we examine the government policies of four countries (US, Australia, New Zealand, and the UK).  We find that the treatment of child support payments when low-income families receive the main cash welfare program for single parents in each country is explicit and fairly well-known.  In the US, states set TANF policy, and most states treat child support and TANF as substitutes, so that each dollar of child support goes to offset TANF expenditures, rather than going to the family. New Zealand is similar, but both Australia and the UK have explicit policies that treat child support and the low-income single-parent benefit program as complements, with custodial parents allowed to keep all child support without affecting their welfare benefit. But this story of explicit policy interactions is only a part of our findings. By using a vignette approach, in which we calculate the components of the total income package in each country under several scenarios, we show that there are a variety of more hidden interactions in which each dollar of child support paid lowers the value of benefits in other programs (low-income housing benefits, for example).  Through this analysis, we calculate the proportion of each dollar of child support going to the custodial parent family versus being retained by governments to offset program expenditures across several programs. While these proportions vary for families in different parts of the income distribution within countries, in general the US has the highest proportion of child support going toward cost recovery, followed by New Zealand, then Australia, then the United Kingdom.  We close with a discussion of the relative advantages of the alternative schemes we have described. Our approach illustrates varying social policy contexts of single-parent families and highlights consequential policy choices for governments.