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In many developed countries lone parent families face high rates of child poverty. Among those lone parents who do get child maintenance there is a hidden problem. States may retain all, or a proportion, of the maintenance that is paid in order to offset other fiscal costs. Thus, the potential of child maintenance to alleviate poverty among lone parent families may not be fully realized, especially if the families are also in receipt of social assistance benefits. This paper provides an original comparative analysis exploring the effectiveness of child maintenance to reduce child poverty among lone parent families in receipt of social assistance. It addresses the question of whether effectiveness is compromised once interaction effects (such as the operation of a child maintenance disregard) are taken into account in four countries Australia, Finland, Germany and the UK using the LIS dataset (2013). It raises important policy considerations and provides evidence to show that if policy makers are serious about reducing child poverty, they must understand how hidden mechanisms within interactions between child maintenance and social security systems can work as effective cost recovery tools for the state, but have no poverty reduction impact. [ABSTRACT FROM AUTHOR]

In most developed countries, children in lone parent families face a high risk of poverty. A partial solution commonly sought in English-speaking nations is to increase the amounts of private child maintenance paid by the other parent. However, where lone parent families are in receipt of social assistance benefits, some countries hold back a portion of the child maintenance to reduce public expenditures. This partial ‘pass-through’ treats child maintenance as a substitute for cash benefits which conceivably neutralises its poverty reduction potential. Such neutralising effects are not well understood and can be obscured further when more subtle interactions between child maintenance systems and social security systems operate. This research makes a unique contribution to knowledge by exposing the hidden interaction effects operating in similar child maintenance systems across four countries: the United Kingdom, United States (Wisconsin), Australia and New Zealand. We found that when child maintenance is counted as income in calculating benefit entitlements, it can reduce the value of cash benefits. Using model lone parent families with ten different employment and income scenarios, we show how the poverty reduction potential of child maintenance is affected by whether it is treated as a substitute for, or a complement to, cash benefits. [ABSTRACT FROM AUTHOR]