Family Law E¤ects on Divorce, Fertility and Child Investment1

In order to assess the child welfare impact of policies governing divorced parenting, such as child support orders, child custody and placement regulations, and marital dissolution standards, one must consider their in‡uence not only on the divorce rate but also on spouses’fertility choices and child investments. We develop a continuous time model of marriage, fertility and parenting, with the main goal being the determination of how policies toward divorce in‡uence outcomes for husbands, wives and children. Estimates are derived for model parameters of interest using the method of simulated moments, and simulations based on the model explore the e¤ects of changes in custody allocations and child support standards on outcomes for intact and divided families. Simulations indicate that, while a small decrease in the divorce rate may be induced by a signi…cant child support hike, the major e¤ect of child support levels for both intact and divided households is on the distribution of welfare between parents. Simulated divorce, fertility, test scores and parental welfare all increase with a move toward shared physical placement. Finally, the simulations indicate that children’s interests are not necessarily best served by minimizing divorced parenting. JEL codes: J12, J13, J18