The Effects of Child Support on the Labor Supply of Custodial Mothers Participating in TANF

Laura Cuesta, University of Wisconsin-Madison
Maria Cancian, University of Wisconsin-Madison

The high incidence of poverty among custodial mother families has prompted policies to increase the labor force participation of mothers, and the child support payments of noncustodial fathers. Yet, custodial mothers’ decision to work for pay may differ depending on whether or not they receive child support. All else equal, microeconomic theory suggests that non-labor income such as child support will reduce labor supply. We use data from a statewide randomized experiment conducted in Wisconsin to examine the effects of child support receipt on the labor supply of custodial mothers participating in TANF (N=2,159). 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. Our results suggest that increases in child support can serve to complement, rather than discourage, increases in custodial mother employment.