Key points are not available for this paper at this time.
In this paper we analyze the relationship between the income sources of custodial divorced parents and their expenditure patterns. We use data from the Consumer Expenditure Survey to directly investigate the issue of whether or not divorced mothers receiving support income spend larger amounts on child than those not receiving support holding total household income constant. By comparing the estimated coefficients on support income and other income in an endogenous Engel curve specification we argue that we can classify goods as being public or private and say something about the expenditure patterns of noncustodial fathers under a Nash equilibrium model of parental expenditures on public goods and some plausible assumptions regarding the manner in which support transfer decisions are made by noncustodial fathers. Our empirical results indicate that income composition does affect the expenditure patterns of divorced mothers and that consumption externalities exist even among divorced parents.
Boca et al. (Sat,) studied this question.