Noncustodial Parents’ Child Support and Custodial Parents’ Income Packages: Comparing the Great Recession and COVID-19 Recession Eras

Marci Ybarra, Alejandra Ros Pilarz, Laura Cuesta, and Anna Walther
October 2024
CSRA-2022-2024-T9
Link to CSRA-2022-2024-T9-Report (PDF)

The Great Recession (GR) and the COVID-19 pandemic recession (PR) were the greatest economic downturns since the turn of the century. While both threatened the economic well-being of families in the United States, particularly those with low-incomes, the U.S. social policy response was markedly different for each recession. This report examines how separated families’ economic well-being differed between these two recessionary periods using the following research questions: (1) How did noncustodial parents’ (NCPs) child support outcomes and custodial parents’ (CPs) income packaging strategies evolve during and after the COVID-19 pandemic recession (through 2022)? and (2) How do NCPs’ child support outcomes and CPs’ income packages during the pandemic period (2020–2022) compare to parents’ outcomes during the Great Recession period (2007–2011)?

We constructed an event-study dataset centered around the quarter when Wisconsin experienced peak unemployment in each recession (Q2 of 2020 and Q2 of 2009). In each recessionary period, the baseline period was the four quarters prior to the official start of the recession, and the follow-up period was the 10 quarters after peak unemployment. We identified two cohorts each of NCPs and CPs from the Wisconsin Administrative Data Core: N= 65,195 NCPs with child support orders during the Great Recession (GR) period and N = 72,625 NCPs with orders during the pandemic recession (PR) period. Similarly, we identified N = 65,375 CPs with child support orders in the GR period and N = 76,159 CPs with orders in the PR period. For NCPs, we examined their income from earnings, Unemployment Insurance (UI), and estimated tax benefits/liabilities. We examined NCPs’ child support payment amounts, compliance, and arrears. For CPs, we examined income from earnings, child support, UI, Supplemental Security Income (SSI), Social Security and Disability Insurance (SS/SSDI), Temporary Assistance for Needy Families (TANF), and estimated tax benefits. We estimated CPs’ total income and income relative to the federal poverty line. For each outcome, we used person-level fixed effects models to estimate the average within-person change in each quarter of the follow-up period relative to the baseline period.

Safety net expansions during the PR played an important role in increasing child support payments in the short-term and in mitigating short-term income losses for both NCPs and CPs. In contrast, during the GR, NCPs’ child support payments steadily declined, compliance rates remained near pre-recession levels, and arrears increased by a larger magnitude. Safety net expansions buffered declines in CPs’ earnings and child support income, but the magnitude and duration of these expansions differed substantially across the two recessionary periods. Tax benefits were substantial income sources for CPs in both recessions, though the magnitude was greater in the PR due to new policies: notably the economic impact payments and expanded Child Tax Credit. UI was also a major source of income that responded counter-cyclically to unemployment rates, but UI benefits increased by a larger magnitude at the onset of the PR compared to the GR. Other cash-based safety net programs—SSI, SS/SSDI, and TANF—played a smaller role in both recessions. CPs’ total income increased in both recessionary periods but by a larger magnitude during the PR. In turn, poverty decreased during the PR, but not the GR, though poverty returned to pre-recession levels by 2022 once safety net benefits expired. Overall, our findings suggest that, while the safety net provided some buffer in both recessions, the degree of support was notably larger during the PR.

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