Measuring Public-Private-Substitution After Divorce: Ex-Spouse Income and the Effect of Marital Separation on Social Assistance Take-up

Both public social assistance and private child and spousal support reduce the poverty risks of single parent households. However, research on system interactions has highlighted that social assistance eligibility is often denied for households that have a private support order. Such public-private substitution reduces social expenditures but undermines poverty reduction and prolongs economic dependency in separated couples.
Using Swiss administrative data on ex-spouse income and social assistance take-up after divorce, this study develops an empirical approach to quantify public-private substitution. We have found that marital separation increased a mother’s probability of receiving social assistance by 19 percentage points if both her own and her ex-spouse’s income were in the bottom 30% of the distribution. This probability was reduced to 1 percentage point for low-income mothers whose ex-spouses had top-30% incomes. This strict public-private substitution could partially account for child poverty and reflects the traditional gender regime in Switzerland.