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Economic Incentives and Foster Child Adoption

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  • Laura Argys
  • Brian Duncan

Abstract

Every year, a large number of children in the United States enter the foster care system. Many of them are eventually reunited with their biological parents or quickly adopted. A significant number, however, face long-term foster care, and some of these children are eventually adopted by their foster parents. The decision by foster parents to adopt their foster child carries significant economic consequences, including forfeiting foster care payments while also assuming responsibility for medical, legal, and educational expenses, to name a few. Since 1980, U.S. states have begun to offer adoption subsidies to offset some of these expenses, significantly lowering the cost of adopting a child who is in the foster care system. This article presents empirical evidence of the role that these economic incentives play in foster parents’ decision of when, or if, to adopt their foster child. We find that adoption subsidies increase adoptions through two distinct price mechanisms: by lowering the absolute cost of adoption, and by lowering the relative cost of adoption versus long-term foster care. Copyright Population Association of America 2013

Suggested Citation

  • Laura Argys & Brian Duncan, 2013. "Economic Incentives and Foster Child Adoption," Demography, Springer;Population Association of America (PAA), vol. 50(3), pages 933-954, June.
    • Handle: RePEc:spr:demogr:v:50:y:2013:i:3:p:933-954
    DOI: 10.1007/s13524-012-0166-0
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    References listed on IDEAS

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    Cited by:

    1. Cameron Taylor, 2024. "Why do families foster children? A Beckerian approach," Review of Economics of the Household, Springer, vol. 22(1), pages 261-293, March.
    2. Bishop Kelly C. & Mac Donald Diana E., 2022. "The Effect of Paying Parents to Adopt: Evidence from Minnesota's Foster-Care System," Working Papers 2022-01, Banco de México.
    3. Simon, David & Sojourner, Aaron & Pedersen, Jon & Ombisa Skallet, Heidi, 2024. "Financial Incentives for Adoption and Kin Guardianship Improve Achievement for Foster Children," IZA Discussion Papers 17057, Institute of Labor Economics (IZA).
    4. 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.
    5. Alexa Prettyman, 2024. "Happy 18th Birthday, Now Leave: Estimating the Causal Effects of Extended Foster Care," Working Papers 2024-02, Towson University, Department of Economics, revised Feb 2024.
    6. Margaret E. Brehm, 2018. "The Effects of Federal Adoption Incentive Awards for Older Children on Adoptions From U.S. Foster Care," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 37(2), pages 301-330, March.
    7. Alexa Prettyman, 2024. "States of Opportunity for Youth Aging Out of Foster Care," Working Papers 2024-01, Towson University, Department of Economics, revised Jan 2024.
    8. David Simon & Aaron Sojourner & Jon Pedersen & Heidi Ombisa Skallet, 2024. "Financial Incentives for Adoption and Kin Guardianship Improve Achievement for Foster Children," Upjohn Working Papers 24-401, W.E. Upjohn Institute for Employment Research.

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