Reducing Welfare Dependency and Poverty

The purpose of this paper Is to Investigate empirically two Important questions concerning chi Id support enforcement~ Ftrst, what Is the Impact of receiving chi Id support on welfare dependency and poverty? Second, howeffective are current child support enfor,cement proced~res? The a~alysls utilizes data from the 1979 AFDC Recipient Characteristics Study and the March/Apr I J 1982 Current Population Survey (CPS). A theoretical model of participation In the AFDC program Is developed and estimated using the CPS data. The welfare particIpation model results are used In conjunction with data fr6m the CPS and AFDC surveys on the Child S'upport Enforcement (IV-D) Program 'to derive estimates of the Impact of the IV-D program (as It existed In 1979 and 1981) on' receipt of chi Id support for AFDC and non-AFDC faml lies. Based on the empirical findings, simulations are performed to predict how a variety of child support enforcement policies woul d affect weI fare dependency, poverty, and wei fare costs. The simulations suggest that chi Id support enforcement represents a potentially effective means for reducing welfare costs, but that given the current award structure there Is little prospect for Its having a significant Impact on reducing either welfare dependency or poverty among single parent fam II Ies. 1. l.!J.tr:Q.d.Y~.:tlQ.!J Female-headed families have among the highest poverty rates of any major demographic group In the United states. In 1982,48 percent of a) I female headed fam I I Ies were poor, compared to 10 percent of other types of fam IIIes (U.S. House of Representatives, 1983a). Despite the fact that only one-fifth of all families with children are headed by women.,.this group constitutes the major I ty (55 percent) of a I I poor fam II I es. With an Increasing rate of II legitimacy and a high divorce rate, the size of the fema Ie-headed popu I at Ion cant I nues to grow. l In 1960, there were 1.9 mII I Ion fema Ie-headed fam II Ies I n the U.S., or 7 percent of a I I fam I, lies. By 1983, the number of fema Ie-headed fam II I es tota I ed 5.7 mII I Ion, or 19 percent , . of all faml lies CUSDHHS, 1983). The Increase In the number of female-headed faml I ies has resulted In a growing number of chi I dren not living with both natural parents. In 1982, 20 percent of chi Idren under the age of 18 were living with theIr mother only CU.S. House of Representatives, 1983b). Moynihan (1981) has projected that by the year 2000, on I y one-ha I f of a I I ch I I dren born I n the U.S. wI I I have spent their entire childhood living with both natural parents. Unless new pol icles are deve loped for I ncreas I ng the econom I c we I I be I ng of fema I e headed . faml lies, It seems certain that overal I poverty and welfare dependency In the Un I ted States wi J I Increase. The traditional approach adopted by pol Icymakers to reduce poverty and welfare dependency In faml lies headed by women has centered on Increasing the employment of the mother. 2 While such policies may have had an Impact, they have raised Important and difficult tradeoffs concerning the wei I-being of the younger chi Idren. Nevertheless, despite the existence of work requirements, few women on wei fare hold Jobs3 and the Incld~nce of poverty remains high for th Is group. One Impor.tant alternative (or perhaps complement) to pol ici~s aimed at Increasing the employment of the mother is to collect child support from.the absent father. Such an approach has received Increasing attention In recent years. In 1975, Congress established the Ghl Id S~pport Enforcement Program as Part D of Title IV of the Social, Security Act.4 The IV-D program, prlmari Iy a state program, with significant tederal Involvement and federal funding, requires each ~tate to develop a chi Id ,support enforcement program that provides services for establishing paternity, locating absent parents, establ IshIng support obi Igatlons, .and enforcing such obi Igatlons. The states are required to provide these services to all AFDC families and to non-AFDC families who request such serv Ices, a Ithough a fee must be charged to the latter fam i I ·1 es.5 To fac III tate co I Iect Ion across states, a Federa I Parent Locator Service was established with access to Federal data files on Individual s, Including Social Security Administration earnings records and Internal Revenue Service tax records. State~ are al so given financial Incentives for cooperating with one another.6 Very few women on welfare receive chi Id support from the absent rather. According to data from the Current Population Survey (CPS) for 1981, only 15 percent of ful I-year recipients of AFDC benefits received chi Id support and only 28 percent had a formal child support award.7 Clearly, there are a large number of absent fathers who are contributing nothing to the support of their chi Idren. However, the problems encountered In collecting support are ref Iected In the fact that a Imost one-ha If of the ch i Idren In AFDC fam I I Ies had parents who were not marrled8 and In 47 percent of the cases the whereabouts