Date of Graduation

8-2013

Document Type

Dissertation

Degree Name

Doctor of Philosophy in Economics (PhD)

Degree Level

Graduate

Department

Economics

Advisor/Mentor

Amy Farmer

Committee Member

Jingping Gu

Second Committee Member

Andrew Horowitz

Keywords

Social sciences, Child care, Child custody, Divorce, Quality-price relationship

Abstract

In my first essay I use data from licensed child care centers in the state of Arkansas to examine the relationship between quality and price charged. To measure quality, I use Arkansas's Better Beginnings Quality Rating and Improvement System, a tier-structured voluntary certification program which can be viewed as a voluntary increase in regulations for licensed child care centers which allows them to send an observable signal of quality to consumers. Using an hedonic pricing estimation with controls for varying geographic markets, results indicate firms with Better Beginnings classification charge higher prices once the highest levels of certification are obtained. The results provide support for policy in favor of greater reporting or release of information regarding child care characteristics, especially those associated with higher quality care, which allow child care facilities to make their quality known in a way that is easily observable.

My second essay seeks to answer the question: Why do some divorcing couples use the courts to settle child custody disputes? Settlement literature predicts that cases should settle efficiently and avoid court costs under symmetric information. Shavell (1993) proposes that settlement failure occurs when the resource under dispute is indivisible and the value placed on it is so high that wealth constraints are binding. These characteristics are present in child custody disputes. In these cases, sharing children through joint custody may be impractical because parents are not able or willing to share. The paper uses the Stanford Child Custody data set to empirically analyze how indivisibility may lead to settlement failure in child custody disputes using variables such as distance between the divorced parents' households, levels of hostility, and differences in custody type filed. Other variables included in the analysis are income, home ownership, involvement levels of each parent with the children, number of children, each parent's desire to settle the divorce case outside of the courts, and the use of lawyers. Results show that parents who file for different types of physical custody and couples that display high levels of hostility are more likely to end up in court.

My final essay examines the hypothesis that divorcing couples make trade-offs between child custody and child support in order to secure their preferred custody outcome. Mnookin and Kornhauser (1979) introduce the concept of "bargaining in the shadow of the law" which describes negotiations made between parents in the framework of their existing legal setting. Using data from the Stanford Child Custody Study, I test to see if parents, specifically mothers, accept lower amounts of child support in order to receive sole physical custody of their children. Using a two-stage estimation approach to account for the joint determination of child custody and child support, I find that the legal environment surrounding divorce proceedings, including aspects such as mandatory mediation along with a preference of the courts for joint custody, significantly increases the likelihood of joint physical custody. Results from the estimation of the child support equation suggest that along with the typical guideline variables such as income of the parents, number of children, and visitation, the time between separation and filing for divorce and the mother filing for divorce significantly decrease the support award while lawyer representation of the mother significantly increases the amount of child support issued. Using a selection model, I find that the significant negative relationship between the custody and support equations, accounted for in the selection term, signifies that mothers who "win" their preferred custody are accepting lower amounts of child support.

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