Enforcing divorce settlements: evidence from child support compliance and award modifications

This paper uses an implicit contracting framework to understand the dynamic nature of divorce settlements and to analyze the determinants of noncompliance with child support awards. In addition to the standard economic variables that affect the noncustodial parent's (NCP's) ability to pay child support, our approach focuses on factors that may affect the NCP's desire to pay, such as the ongoing relationship between the two parents and between the NCP and the children. We also examine the "state-contingent" nature of child support payments and explore the factors that lead to modifications in child support agreements. Using a longitudinal data set collected by the Stanford Child Custody Project, the empirical analysis provides documentation that compliance by noncustodial fathers can vary substantially from month to month. In addition, we find that even within a short period after divorce, a substantial minority of parents agree to make informal modifications to their divorce settlement in response to changes in economic circumstances and in custodial arrangements.