Child support and labor market responses: Evidence from Ecuador

• In Event: Families and Labor Supply

Abstract

With a significant portion of marriages ending in divorce, understanding the effects of child support obligations on the behavior of parents and the outcomes of their children is central to economic research. While a large literature analyzes the behavioral effects of transfers between unrelated individuals, such as taxation or public assistance, much less is known about transfers that take place within ongoing personal relationships, such as child support. This distinction matters because the dynamics of enforcement, compliance, and bargaining differ fundamentally when the transfer occurs between individuals who share parental responsibilities.

This project addresses this gap by constructing a novel dataset, assembled from the complete universe of judicial processes related to child support in a province of Ecuador since 2012, and linking it to detailed administrative labor records. We take advantage of the random assignment of cases to judges in Ecuadorian family courts to estimate how variation in court-ordered child support obligations affects parents’ labor supply, the likelihood of remarriage, and post-separation fertility. In addition, we aim to estimate the optimal level of child support obligations by accounting for behavioral responses—especially non-compliance—and examining how these responses vary with the amount ordered and with the characteristics of both parents.

Authors

• Paula Lopez, plopezv@umich.edu

• Rosario Aldunate