Institute for Research on PovertyUniversity of Wisconsin - Madison

Do Child Maintenance Policies Improve Children’s Economic Well-being in Both

Developing and Developed Countries? The Case of Colombia and the US

Laura CuestaDaniel R. Meyer

Overview of talk

I. BackgroundII. Data and MethodsIII. ResultsIV. Summary and Next Steps

I. BACKGROUND

Motivation

Single-parent families prevalent, and increasing Increased in 24/25 OECD countries

between mid-1980s and mid-2000s Single-parent families economically

vulnerable in most countries Poverty rates quite high, over 30% in mid-

2000s in 14 OECD countries (wide range of countries: US, Japan, Mexico, Netherlands)

Motivation

Most countries have a variety of policies designed to increase income security for children who do not live with both parents. Child Maintenance (CM) has the potential to

improve children’s economic well-being But is CM policy working? Is it associated

with lower poverty in different types of countries? Reductions in child poverty by 10 pp in the mid-

2000s in 8/22 OECD countries. Very little is known in developing countries

Contributions of this paper

There is no published research on custodial-parent families in Colombia and their economic well-being or their income sources

CM policy may be important at improving the economic well-being of Colombian children in these families - but there is no information

Study focus on two very different countries: Colombia: very little is known about CM US: substantial amount is known about CM

This stage of the study is mostly focused on Colombia US data used as a benchmark

Research questions

What is the extent of the problem? Did custodial-parent families increase during the last

decade? Are they economically vulnerable?

What are child maintenance outcomes? Do child maintenance policies improve

children’s economic well-being in both developing and developed countries? (not done yet)

Indicator Colombia USPopulation 44 million 311 millionGDP Per Capita (PPP) US$ 8,959 US$ 46,653Unemployment Rate 10.6% 5.8%Life Expactancy at Birth 73 79.6Mean Years of Schooling 7.4 12.4Poverty Rate 45.5% 13.2%Income Gini Coefficient 58.5 40.8

Basic Data: Colombia & US (2008)

Source: UNDP 2010 International Human Development Indicators. Poverty defined within each country. Poverty and unemployment rates for Colombia taken from DANE. US poverty rates taken from Census Bureau and US unemployment rates taken from BLS.

Child Maintenance OverviewP

aren

ts s

epar

atio

n or

div

orce

Parents decide where child will live (assume Mom)

Mom ask Dad for financial help.

They may agree to an amount, which may be paid voluntarily.

If they cannot agree, she may request help from the NIFW or go straight to court.

Amount varies from case to case.

Amounts paid privately and voluntarily.

If not paid, she can sue. If succesful, the order can be withheld from his wages. If he does not pay, he could go to jail.

Same Same She may request help from the CSA

Amount to be transfered (the order) set by formula.

Orders automatically withheld from wages.

CSA monitors payments, and will take actions if he falls behind. Jail is possible

Col

ombi

aU

S

II. DATA AND METHODS

Aspects Colombia USSources Quality of Life Survey (QLS) Current Population Survey

(CPS), Child Support Supplement

Child Maintenance

Only two questions on CM (receipt and amount)

Variety of questions on CM

Type of survey Cross-sectional, every other year

Cross-sectional, every other year

Other variables Demographics, education, income, labor market, expenditures.

Demographics, education, income, and labor market

Custodial-parent Sample

1997 Sample: 2101 2008 Sample: 4179

1997 and 2007 sample: ~3000

Data

Methods

Straightforward Descriptive Analyses Estimating poverty with and without child maintenance

– Family is the unit of analysis:• Custodial parent + her/his children (if single) • Custodial parent + her/his children + partner (if married or cohabitating)

– Not making causal claims. Accounting exercise. Using each country’s official definition of poverty

– Emphasizes context of poverty (within-country) rather than trying to do formal cross-country comparisons

III. RESULTS

What is the extent of the problem in each country? Did custodial-parent

families increase during the last decade?

21%

26%29%

32%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1997 2007/8

Prevalence of Custodial-Parent Households (Colombia) / Families (US)

Colombia US

Source: Authors' Calculations based on QLS (Colombia) and CPS (US).

89.6%87.3%

10.4%12.7%

85.1% 82.7%

14.9%17.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1997 2007/8

%Prevalence of Custodial Parents, by Gender

Col-Cust Mom Col-Cust Dad US-Cust Mom US-Cust DadSource: Authors' Calculations based on QLS (Colombia) and CPS (US).

What is the extent of the problem in each country?

Did custodial-parent families increase during the last decade? YES

Are they economically vulnerable?

60.3% 59.3%

80.9%86.7%

78.6%79.5%

93.7% 90.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1997 2007/8

%Custodial Parents with Earnings

Col-Cust Mom Col-Cust Dad US-Cust Mom US-Cust Dad

Source: Authors' Calculations based on QLS (Colombia) and CPS (US).

Family Monthly Income (Means)

GroupColombia US

1997 2008 1997 2007

All (PPP US$) (2007 US$)Moms 279 373 2,017 2,286Dads 337 526 3,904 3,839Source: Authors’ Calculations based on QLS (Colombia) and CPS (US). Table shows means among those with incomes greater than zero.

Poverty Rates

GroupColombia US

1997 2008 1997 2007

Total Population 52.7% 45.5% 13.3% 12.5%Custodial ParentsMoms 75.8% 82.8% 32.1% 27.0%Dads 38.6% 61.4% 10.4% 12.9%Source: Authors’ Calculations based on QLS (Colombia) and CPS (US). Poverty defined within each country. Figures for total population taken from López & Núñez 2007, DANE-DNP-MESEP (Colombia) and Census Bureau (US).

Why are incomes so low and poverty rates so high in Colombia?

Low levels of human capital mean low earnings (and often informal sector work)– 63% (moms) - 68 (dads)% of custodial parents in

Colombia are without a secondary (high school) degree

Few other income sources– Relatively low levels of public transfers– One of our questions: are there private transfers

that can fill this gap?

Child Maintenance Outcomes in Each Country

21.1%

25.1%

2.2% 3.6%

40.4% 37.5%

23.1%

25.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1997 2007/8

%Percentage with Child Maintenance

Col-Cust Mom Col-Cust Dad US-Cust Mom US-Cust Dad

Source: Authors' Calculations based on QLS (Colombia) and CPS (US).

Monthly Amounts Received (Means)

GroupColombia US

1997 2008 1997 2007

All (PPP US$) (2007 US$)Moms 138 215 395 365Dads 78 79 396 376Source: Authors’ Calculations based on QLS (Colombia) and CPS (US).

What % of Family Income is Child Maintenance?

GroupColombia US

1997 2008 1997 2007

All (PPP US$) (2007 US$)Moms 39% 44% 16% 14%Dads 17% 18% 9% 10%

Below PLMoms 58% 59% 34% 39%Dads - 30% 60% 29%

Source: Authors’ Calculations based on QLS (Colombia) and CPS (US).

Is Child Maintenance Pulling Some Custodial Parents Out of

Poverty in Colombia?

Child Maintenance and Poverty

Of mothers who are estimated to be poor without child maintenance, what percentage were brought out of poverty after including CM? (Almost no fathers were brought out of poverty)

1997 2008Moms 4.0% 4.8%

Source: Authors’ Calculations based on QLS (Colombia).

Child Maintenance and Extreme Poverty

Of mothers who are estimated to be extremely poor without child maintenance, what percentage were brought out of extreme poverty after including CM? (Almost no fathers were brought out of extreme poverty)

Source: Authors’ Calculations based on QLS (Colombia).

1997 2008Moms 8.5% 8.8%

V. SUMMARY AND NEXT STEPS

Summary of Results for Colombia

What is the extent of the problem? – Did custodial-parent families increase during the

last decade? YES– Are they economically vulnerable? YES

What are child maintenance outcomes? – Few custodial parents receive; amounts tend to

be low; but for those who receive something, it’s a substantial part of their income package

Similarities and Differences between US & Colombia

Similarities1. Higher poverty rates than the total population2. Custodial mother families more likely to be poor 3. Low child maintenance receipt – dads

Differences4. Growth rate is higher in Colombia (19% Vs 9%)5. Poverty rates are substantially higher in

Colombia6. Child maintenance as a % of family total

income is more important for custodial parents in Colombia than in the US

Next Steps for this Project

All analyses to date use families as unit of analysis; we plan to focus on children rather than families

We will analyze data on individual families and children in the US (so far only using published tables)

We plan to conduct descriptive regressions that examine characteristics associated with receiving child maintenance and models comparing whether characteristics are the same across the two countries

Future Research

What is the potential of child maintenance in Colombia? – Are we already collecting as much as is possible

because incomes are so low? Is there a causal effect of receiving child

support? Is child support more important than other

sources of income (perhaps because it has important symbolic meaning)?

THANK YOU