University of Wisconsin–Madison
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Potential Effects of a Self-Support Reserve in Wisconsin

New federal regulations require states to consider the basic subsistence needs of noncustodial parents in setting child support orders and encourages the use of a self-support reserve, an amount of income set aside for the noncustodial parent’s own needs, before child support is assessed. We use unique administrative data on matched pairs of Wisconsin parents to simulate child support orders and income under two self-support reserve models. We address the characteristics of noncustodial parents whose orders would change; when and how often a self-support reserve would increase or decrease the income available to noncustodial parents, and to custodial parents and children; and the relative economic well-being of all parties. Implementation of a self-support reserve would on average increase noncustodial parents’ post-child support incomes, and reduce poverty levels. However, for custodial parents and children it would on average have the opposite effect, reducing income and increasing poverty levels. Because most low-income noncustodial parents owe support to low-income custodial parents, meeting the basic needs of one often comes at a cost to the other.

Categories

Child Support, Child Support Policy Research, Economic Support, Family Income, Financial Security, Orders & Payments

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