I develop a model in which exact compliance with child support orders is synonymous with cooperative outcomes with respect to child good expenditures. The child support order imposed by institutional agents serves as focal point for the problem of dividing the gains from cooperation. Compliance is observed when the gains from cooperation exceed the value of noncooperation for both parents. The model is estimated using administrative data from the state of Wisconsin. My estimates imply that increasing child support enforcement activities may have weak effects on the welfare of children of divorced parents.
ASJC Scopus subject areas
- Economics and Econometrics