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The Effects of Routine Income Withholding of Child Support on AFDC Participation and Costs

Routine income withholding, mandated by the Family Support Act of 1988, is one of several child support reforms currently being implemented nationwide. In routine income withholding, child support payments are deducted from the paychecks of nonresident parents and transferred to resident parents by a state agency. Routine withholding has previously been shown to increase payments by 11 to 30 percent. Using data from a Wisconsin demonstration of routine withholding, we find small potential for increased child support collections in cases at risk for AFDC participation because of very low awards. An analysis of the effects of routine income withholding on AFDC participation rates and costs suggests that withholding had little to no effect upon AFDC participation rates or public AFDC expenditures. Nevertheless, withholding is an important component of child support reform, and in conjunction with other reforms may have a significant impact on private and public transfers. The Effects of Routine Income Withholding of Child Support on AFDC Participation and Costs