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Foster care and the earned income tax credit

Author

Listed:
  • Amelia M. Biehl

    (Florida Gulf Coast University)

  • Brian Hill

    (Salisbury University)

Abstract

Foster care is a source of significant costs to both governments and foster children. Policies that provide income support to households potentially reduce entry into foster care via reducing child maltreatment and improving child behavior. As part of the American Recovery and Reinvestment Act in 2009 (ARRA2009), the federal government expanded the earned income tax credit (EITC), which is an important income support program for low-income working households. Using state-level data, we investigate the impact of this EITC expansion on state-level foster care entry rates. Typically, states with state-level EITC match federal EITC spending at a specific rate, meaning that increases in federal EITC spending increase state-level spending as well. We find that expansion of EITC decreased foster care entry rates by 7.43% per year in states with a state-level EITC, relative to those without. In models that separately examine foster care entry rates by age of the child, we find that the ARRA2009 had different effects on foster care entry based on the child’s age. We find that ARRA2009 decreased foster care entry rates for children age 11–15 by nearly 12% in states with a state EITC and it decreased foster care entry rates for children age 16–20 by roughly 17% in states with a state EITC, relative to states without a state EITC.

Suggested Citation

  • Amelia M. Biehl & Brian Hill, 2018. "Foster care and the earned income tax credit," Review of Economics of the Household, Springer, vol. 16(3), pages 661-680, September.
    • Handle: RePEc:kap:reveho:v:16:y:2018:i:3:d:10.1007_s11150-017-9381-1
    DOI: 10.1007/s11150-017-9381-1
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    References listed on IDEAS

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    Cited by:

    1. Luke P. Rodgers & Cullen T. Wallace, 2020. "Who responds to changes to the federal adoption tax credit? Evidence from Florida," Southern Economic Journal, John Wiley & Sons, vol. 87(2), pages 483-516, October.
    2. Collins, Cyleste C. & Bai, Rong & Fischer, Robert & Crampton, David & Lalich, Nina & Liu, Chun & Chan, Tsui, 2020. "Housing instability and child welfare: Examining the delivery of innovative services in the context of a randomized controlled trial," Children and Youth Services Review, Elsevier, vol. 108(C).
    3. Anna Aizer & Adriana Lleras-Muney & Katherine Michelmore, 2023. "The Effects of the 2021 Child Tax Credit on Child Developmental Outcomes," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 172-189, November.
    4. Rostad, Whitney L. & Klevens, Joanne & Ports, Katie A. & Ford, Derek C., 2020. "Impact of the United States federal child tax credit on childhood injuries and behavior problems," Children and Youth Services Review, Elsevier, vol. 109(C).
    5. Wood, S. & Scourfield, J. & Stabler, L. & Addis, S. & Wilkins, D. & Forrester, D. & Brand, S.L., 2022. "How might changes to family income affect the likelihood of children being in out-of-home care? Evidence from a realist and qualitative rapid evidence assessment of interventions," Children and Youth Services Review, Elsevier, vol. 143(C).
    6. Lindquist-Grantz, Robin & Downing, Kimberly & Hicks, Meredith & Houchin, Cherie & Ackman, Victoria, 2022. "Watch Me Rise: An evaluation of Wraparound with homeless youth with a child welfare history," Children and Youth Services Review, Elsevier, vol. 141(C).
    7. Otto Lenhart, 2019. "The effects of income on health: new evidence from the Earned Income Tax Credit," Review of Economics of the Household, Springer, vol. 17(2), pages 377-410, June.
    8. William Schneider & Lindsey Rose Bullinger & Kerri M. Raissian, 2022. "How does the minimum wage affect child maltreatment and parenting behaviors? An analysis of the mechanisms," Review of Economics of the Household, Springer, vol. 20(4), pages 1119-1154, December.

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    More about this item

    Keywords

    Foster care; Earned Income Tax Credit; American Recovery and Reinvestment Act of 2009; Difference-in-difference;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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