Conference Paper Interaction Within the Family: Collective Approach and Bargaining Models Conference
Using Fathers' Child Support Payments to Test Income Pooling
29 Sep 2005
A large proportion of divorced and separated fathers form new partnerships. The new partner's preferences are likely to put a much lower weight (if any) on expenditures on the man's children from his previous union. As a consequence, his own and his partner's income would have different impacts on his child support payments if partners' relative incomes affect bargaining power in household decisions. Estimating these impacts requires information on whether or not men have dependent children living elsewhere and on their new households, which is relatively rare. Furthermore, preferences favouring child support may be correlated with the father's and his partner's income, making estimates based on between-family variation from cross-section data suspect. This paper exploits within-family variation in the British Household Panel Survey (1991-2003) to estimate the impacts of partners' incomes on child support payments from a sample of formerly married men whose histories indicate that they should have a dependent child living elsewhere. Our estimates indicate that a higher share of father's income in household income increases child support relative to household income, suggesting that partners' relative incomes affect their bargaining power in household decisions.