Does Paying Child Support Impoverish Fathers in the US, Finland, and the UK?

Background/Purpose: In most countries, the number of children living apart from one of their parents has increased, and the single-parent families that result are economically vulnerable. Child support policies have been instituted to try to address child poverty. Some have argued that child support policies now go too far, expecting too much from nonresident fathers (NRFs) and in fact, paying child support may be impoverishing NRFs and their new families. We know little about the extent to which this occurs in the US, and even less about how this compares to other countries that may expect less child support. This paper addresses 3 questions: (1)How much do NRFs pay in the US, Finland, and the UK? (2)What proportion of NRFs fall into poverty because of the child support they pay? (3)How do the poverty rates of those paying support compare to those receiving support?

Data/Methods: We use 2013 individual-level data from the US, Finland, and the UK found in the Luxembourg Income Study. In the US sample, 731 fathers report paying child support, compared to 130 in Finland and 609 in the UK. (The number of mothers receiving support is comparable.) We use reported child support, adjusting amounts to be in PPP-adjusted US dollars. The poverty threshold is defined as 50 percent of the median income in each country. To examine the relationship between child support and poverty, we use the accounting framework typical of previous studies, in which pre-child support income is a simple addition/subtraction of child support paid/received; that is, no secondary effects are considered.

Results: We find: (1)Mean child support payments in the US are substantially higher (more than twice as much) as in the UK, which is slightly higher than Finland. (2)In Finland, NRF poverty is rare (4%), and paying child support is not associated with increased poverty. In the UK, poverty rates are higher (12%) and increase to 14% once child support is paid. In the US, poverty rates are even higher, 20%, and increase to 32% after child support is paid. (3)Poverty rates for those receiving support are even higher than for those paying, even after child support is considered, in Finland and the US, though not in the UK.

Conclusions/Implications: Results demonstrate that on balance child support is decreasing poverty among recipients more than it increases it among payers in the US and Finland, though not in the UK. These findings highlight the importance of considering the effects of a policy on all involved parties. The findings also suggest that countries may be able to learn from other countries’ policy experiences.