Unemployment and Child Support Compliance Through the Great Recession

Using previously unavailable data of fathers’ residence from the Fragile Families and Child Wellbeing Study and multiple imputation of missing fathers to select unemployment rates in fathers’ labor markets, our study estimates the reduced - form association between aggregate unemployment and child support compliance. The period of analysis is from 1998 to 2010 which includes the great recession. Previous research used unemployment rates in mothers’ location to represent relevant labor market conditions finding no significant results. Using a fixed effects panel logit model, we found that the association between aggregate unemployment and child support compliance is negative, but sensitive to the unemployment measure. This association is always larger in magnitude and significance when using the unemployment rate at fathers’ rather than at mothers’ location. A 5 percentage-point increase in unemployment, which captures the effect of the great recession, is associated with a 30-32 percentage-point decrease in the probability of complying with child support obligations. The association of the unemployment rate at mothers’ location is weaker and not statistically significant. Thus, using a measure of unemployment at mothers’ and not at fathers’ labor market provides inaccurate estimates of the effect of unemployment on compliance that reflect attenuation bias and measurement error.