Potential Effects of a Self-support Reserve in Wisconsin

Maria Cancian, University of Wisconsin-Madison
Molly Costanzo , University of Wisconsin-Madison
Angela Guarin, University of Wisconsin-Madison
Leslie Hodges, University of Wisconsin-Madison
Daniel R. Meyer, University of Wisconsin-Madison

New policy requires states to reconsider how much child support they require from low-income noncustodial parents (NCPs) and encourages the use of a Self-Support Reserve (SSR), an amount of income set aside for the NCP’s own needs before child support is assessed. SSRs trade off improving economic well-being of NCPs at the expense of CPs and children. We use unique administrative data on matched pairs of Wisconsin parents to simulate child support orders and income under various SSR designs. We address the characteristics of NCPs whose orders would change; how often NCPs, CPs, and children might be helped or hurt by an SSR; the relative well-being of all parties; and how the SSR design itself matters. Preliminary analysis suggests NCPs have higher average, but lower median, earnings than CPs; application of an SSR would leave NCPs with lower net earnings than CPs, but with substantial variation under alternative SSR designs.

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 Presented in Session 4. Marriage, Family, Households, & Unions