IRP Discussion Papers

This paper presents preliminary results of a study to evaluate the effects of Wisconsin's percentage-of-gross-income-child support standard and income withholding on the employment behavior of noncustodial parents. Data from court records and a telephone survey that was carried out after a demonstration of a child support assurance system was implemented in Wisconsin indicate that withholding may increase the hours that noncustodial parents work in the course of a year. As a minimum the data show that withholding does not induce reductions in the work effort of noncustodial parents. This result is in keeping with economic theory, which suggests that, when faced with a lump-sum tax, workers increase hours of work to maintain their consumption levels. The percentage-of-income standard, by reducing the net wage rate per hour of work, may have an opposite effect on hours of work. It was not possible to monitor this effect.