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Economic Incentives and Economic Incentives and Foster Child AdoptionsFoster Child Adoptions
Economic Incentives and Economic Incentives and Foster Child AdoptionsFoster Child Adoptions
Laura Argys and Brian DuncanLaura Argys and Brian Duncan
Department of Economics Department of Economics University of Colorado at Denver University of Colorado at Denver
Laura Argys and Brian DuncanLaura Argys and Brian Duncan
Department of Economics Department of Economics University of Colorado at Denver University of Colorado at Denver
Funded by The National Institute of Child Health and Human Development(1 R03 HD049867-02)
Introduction
BackgroundBackgroundBackgroundBackground
In 1998:
There were approximately 560,000 children in foster care.
122,000 were waiting to be adopted.
36,000 exited foster care due to adoption.
Adoption rates vary considerably.
Similar among boys and girls.
Higher among younger children.
Black children have the lowest adoption rates.
Lower for those placed with single foster parents and those placed with relatives.
Theoretical Framework
The Path Through Foster CareThe Path Through Foster CareThe Path Through Foster CareThe Path Through Foster Care
HomeSetting
FosterCare
Reunification Adoption (2.9% overall)
(20% of eligible)
Removal
(2.7 years)
(14%)
About 24% exit foster care each year
Relatives (3.1%)
Age Outand Other
(4%)
Theoretical Framework
Key LegislationKey LegislationKey LegislationKey Legislation
1. Adoption Assistance and Child Welfare Act of 1980.
“Reasonable efforts” to prevent removals.
Provide services for families in crisis.
Established adoption assistance payments.
Guideline definition of special needs.
2. The Multiethnic Placement Act of 1994 and the Interethnic Adoption Provisions of 1996.
Remove barriers to interracial adoption.
Move children of color to permanent families.
3. Adoption and Safe Families Act of 1997.
“Fast track” to permanency.
Removed the “reasonable efforts” requirement.
Expedite the termination of parental rights.
Literature Review
Previous StudiesPrevious StudiesPrevious StudiesPrevious Studies
1. Medoff (1993).
Adoptions and female labor force participation.
2. Gennetian (1999).
Abortion access and adoptions.
The Supply of Adoptions:
Literature Review
Previous StudiesPrevious StudiesPrevious StudiesPrevious Studies
1. Thompson et al. (2001).
An evaluation of the child welfare system in Washington State.
Adoption subsidy increased foster family adoptions.
2. Avery and Mont (1992).
Data on adoption in New York State.
Children with mental disabilities who qualified for greater adoption subsidies faced a greater probability of adoption.
Subsidies had no effect on the adoptions of other special needs children.
3. Hansen and Hansen (2005).
Aggregate data from the 1996 AFCARS (at the state level).
A positive association between the monthly adoption subsidy for nine year-olds and the total number of children (per 100,000 state population) adopted out of foster care.
Theoretical Framework
The Costs and Benefits of AdoptionThe Costs and Benefits of AdoptionThe Costs and Benefits of AdoptionThe Costs and Benefits of Adoption
Benefits:
Permanency. Emotionally and psychologically desirable (Mulligan, 2003).
Costs:
Financial consequences.
Monthly foster care payments.
Monthly adoption assistance payments.
Legal costs, liability, education, medical...
Foster parents weight the benefits and costs
Theoretical Framework
Research QuestionResearch QuestionResearch QuestionResearch Question
Do adoption subsidies increase adoptions?
Foster children
Adoption assistance payments (1980)
Variation: across state / within state
Lowered the cost of adoption
Theoretical Framework
How To Calculate CostsHow To Calculate CostsHow To Calculate CostsHow To Calculate Costs
Adoption is dichotomous
In most state, foster care payments and adoption subsidies vary by age.
Are parents forward looking?
Cost in present value.
, the timing is not.
Monthly Subsidies
Figure 1: Average Foster Care and Adoption Subsidies, by Child’s AgeFigure 1: Average Foster Care and Adoption Subsidies, by Child’s AgeFigure 1: Average Foster Care and Adoption Subsidies, by Child’s AgeFigure 1: Average Foster Care and Adoption Subsidies, by Child’s Age
300
320
340
360
380
400
420
440
460
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
Mon
thly
Pay
men
t ($
)
(A) Monthly Payments
Foster Care Payments Adoption Payments
$300
$320
$340
$360
$380
$400
$420
$440
$460
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
(A) Monthly Payments (B) Net Present Values
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
Figure 1: Average Foster Care and Adoption Subsidies, by Child’s AgeFigure 1: Average Foster Care and Adoption Subsidies, by Child’s AgeFigure 1: Average Foster Care and Adoption Subsidies, by Child’s AgeFigure 1: Average Foster Care and Adoption Subsidies, by Child’s Age
(A) Monthly Payments (B) Net Present Values
$300
$320
$340
$360
$380
$400
$420
$440
$460
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
$361$361
$386$386
$25$25
$41,406 $41,406
$44,257$44,257
$2,859$2,859
Monthly Subsidies
Foster Care Payments Adoption Payments
Figure 2: Foster Care and Adoption Subsidies Figure 2: Foster Care and Adoption Subsidies in Four Selected States, by Child’s Agein Four Selected States, by Child’s Age
Figure 2: Foster Care and Adoption Subsidies Figure 2: Foster Care and Adoption Subsidies in Four Selected States, by Child’s Agein Four Selected States, by Child’s Age
A. Monthly Payments
1. Minnesota
$200
$300
$400
$500
$600
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
$200
$300
$400
$500
$600
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
2. New Jersey
Foster Care Payments Adoption Payments
Foster CareFoster CarePaymentsPayments
Adoption Payments
A. Monthly Payments
$200
$300
$400
$500
$600
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
$200
$300
$400
$500
$600
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
1. Minnesota 2. New Jersey
Monthly Subsidies
A. Monthly Payments
$150
$200
$250
$300
$350
$400
$450
$500
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
4. California
$150
$200
$250
$300
$350
$400
$450
$500
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
3. South Carolina
Foster CareFoster CarePaymentsPayments
Adoption Payments
The AFCARS Data
DataDataDataData
The 1998 Adoption and Foster Care Analysis and Reporting System (AFCARS) Version 6 Data
Basic information on all children in foster care in 43 states.
Our Sample:
Children 16 and under who were eligible for adoption in 1998.
Exclude: children in supervised independent living, in trial homevisits, in group homes or institutions, or who have runaway.
Children in an additional fifteen states were dropped because of missing data.
Our sample: 81,980 children living in 29 states.
(A) Children Eligible for Adoption (B) Adoption Rates
BoysBoys GirlsGirls
Children Eligible for Adoption and Adoption Rates in 1998Children Eligible for Adoption and Adoption Rates in 1998Children Eligible for Adoption and Adoption Rates in 1998Children Eligible for Adoption and Adoption Rates in 1998
50.9% 49.1%
Overall
20.0% 20.4%
Overall
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Child’s Ageby Child’s Age
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Child’s Ageby Child’s Age
(A) Children Eligible for Adoption (B) Adoption Rates
0
2
4
6
8
10
12
14
16
18
20
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
Percent
BoysBoysBoysBoys GirlsGirls
0
5
10
15
20
25
30
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Child's Age
Percent
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Child’s Raceby Child’s Race
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Child’s Raceby Child’s Race
(A) Children Eligible for Adoption (B) Adoption Rates
53.4
9.23.0
50.7
9.02.9
34.4 33.9
White Black Hispanic Other
BoysBoysBoysBoys GirlsGirls
30.7
15.422.2
14.8
26.4 23.228.7
26.3
White Black Hispanic Other
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Foster Parent's Raceby Foster Parent's Race
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Foster Parent's Raceby Foster Parent's Race
(A) Children Eligible for Adoption (B) Adoption Rates
38.1
4.61.8
4.61.7
21.8
33.7
20.4
36.832.9
White Black Hispanic Other Unknown
BoysBoysBoysBoys GirlsGirls
8.1 8.1
35.0
27.933.2
18.524.6
18.5
27.824.8
White Black Hispanic Other Unknown
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Child's Disabilityby Child's Disability
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Child's Disabilityby Child's Disability
(A) Children Eligible for Adoption (B) Adoption Rates
77.1 78.1
22.9 18.4
Disabled Not Disabled
BoysBoysBoysBoys GirlsGirls
19.6 20.221.1 20.9
Disabled Not Disabled
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Child's Reason for Removalby Child's Reason for Removal
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Child's Reason for Removalby Child's Reason for Removal
(A) Children Eligible for Adoption (B) Adoption Rates
88.0 85.7
12.0 10.8
Child Reason No Child Reason
BoysBoysBoysBoys GirlsGirls
20.4 20.617.2 18.8
Child Reason No Child Reason
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Foster Parent's Ageby Foster Parent's Age
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Foster Parent's Ageby Foster Parent's Age
(A) Children Eligible for Adoption (B) Adoption Rates
23.728.3
36.0
12.0
22.6
35.327.3
11.3
Under 36 36 - 50 Over 51 Unknown
BoysBoysBoysBoys GirlsGirls
20.2
11.2
27.826.9
10.8
19.922.0 21.1
Under 36 36 - 50 Over 51 Unknown
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Placement Typeby Placement Type
Children Eligible for Adoption and Adoption Rates in 1998, Children Eligible for Adoption and Adoption Rates in 1998, by Placement Typeby Placement Type
(A) Children Eligible for Adoption (B) Adoption Rates
52.8
22.8
49.1
1.81.7
22.023.5 22.8
Pre-Adopt Relative Family Missing
BoysBoysBoysBoys GirlsGirls
8.0 8.112.4 15.116.2
11.8
49.8 50.2
Pre-Adopt Relative Family Missing
Basic Patterns
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Foster Family Structureby Foster Family Structure
Children Eligible for Adoption and Adoption Rates in 1998,Children Eligible for Adoption and Adoption Rates in 1998,by Foster Family Structureby Foster Family Structure
(A) Children Eligible for Adoption (B) Adoption Rates
33.9
24.4
41.7
23.7
33.639.2
Married Single Unknown
BoysBoysBoysBoys GirlsGirls
10.6
31.330.321.5
10.5
22.2
Married Single Unknown
Basic Patterns
Adoptkji = + Xkji + Skj + k + j + kji
Adoptkji is a dichotomous variable equal to one if child i of age j
in state k is adopted, and zero otherwise.
The vector k controls for state specific effects, and the vector
j controls for age specific effects.
The vector Xkji represents set of control variables.
The vector Skj includes the foster care and adoption subsidy
variables.
Empirical Specification
Logit Regression SpecificationLogit Regression SpecificationLogit Regression SpecificationLogit Regression Specification
Adoptkji kXkji Skj
Adoptkji
k
j
j
Xkji
Skj
The definition of Skj
Empirical Specification
Foster Care & Adoption Subsidy VariablesFoster Care & Adoption Subsidy VariablesFoster Care & Adoption Subsidy VariablesFoster Care & Adoption Subsidy Variables
(1) Skj = {FCki , ADki}
(2) Skj = {ADki - FCki}
The amount a foster parent must give up to adopt their foster child.
Logit Regression Results
Table 4: Marginal Effects on the Adoption Rate of Eligible Children, by Table 4: Marginal Effects on the Adoption Rate of Eligible Children, by Child’s GenderChild’s Gender
Table 4: Marginal Effects on the Adoption Rate of Eligible Children, by Table 4: Marginal Effects on the Adoption Rate of Eligible Children, by Child’s GenderChild’s Gender
Boys Girls
Difference in Monthly Payment 0.062*** 0.029** (0.013) (0.014)
Child’s Race: Black -0.010* 0.001 (0.005) (0.005)
Hispanic -0.017*** -0.014** (0.006) (0.006)
Other -0.035*** -0.045*** (0.008) (0.008)
Months in Foster Care 0.002*** 0.002*** (0.0001) (0.0001)
Disabled 0.003 -0.011** (0.004) (0.004)
Child Reason for Removal -0.031*** -0.014** (0.005) (0.006)
Sample Size 41,724 40,256
Standard errors are shown in parentheses. Statistically significant at the ***99%, **90%, and *90% confidence level. All regressions include state fixed effects.
Placement TypePlacement TypePlacement TypePlacement Type
22.4
54.3
26.322.3
12.6
28.022.4
48.1
59.1
White Black Hispanic
Boys
27.9
47.4
59.9
32.6
44.4
18.7
White Black Hispanic
22.2
51.1
26.4 25.114.0
30.222.9
46.0
57.4
White Black Hispanic
Girls
25.4
59.5
48.6
19.3
46.2
32.2
White Black Hispanic
Pre-AdoptPre-Adopt RelativeRelative FamilyFamily Married CoupleMarried Couple SingleSingle
Foster Family StructureFoster Family StructureFoster Family StructureFoster Family Structure
Boys
Girls
Basic Patterns
Logit Regression Results
Boys Girls Foster Parent Marital Status:
Married Couple 0.020*** 0.028*** (0.005) (0.005) Unknown 0.167*** 0.174*** (0.010) (0.010)
Related foster parent -0.090*** -0.102*** (0.004) (0.004) Foster Parent Age:
Ages 36 to 50 -0.006 -0.002 (0.005) (0.005) Ages 51 and older -0.042*** -0.035*** (0.005) (0.006) Age unknown -0.015* -0.002
(0.008) (0.009) Foster Parent Race/Ethnicity:
Black -0.074*** -0.076*** (0.005) (0.006) Hispanic -0.006 -0.009 (0.009) (0.009) Other 0.020 0.012 (0.015) (0.014) Unknown 0.048*** 0.040*** (0.009) (0.009)
Standard errors are shown in parentheses. Statistically significant at the ***99%, **90%, and *90% confidence level. All regressions include state fixed effects.
Table 4 (Table 4 (continuedcontinued): Marginal Effects on the Adoption Rate of Eligible ): Marginal Effects on the Adoption Rate of Eligible Children, by Child’s GenderChildren, by Child’s Gender
Table 4 (Table 4 (continuedcontinued): Marginal Effects on the Adoption Rate of Eligible ): Marginal Effects on the Adoption Rate of Eligible Children, by Child’s GenderChildren, by Child’s Gender
Logit Regression Results
Table 5: The Marginal Effect of Lowering the Cost of Adoption by $100 Table 5: The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s Genderper Month, by Child’s Gender
Table 5: The Marginal Effect of Lowering the Cost of Adoption by $100 Table 5: The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s Genderper Month, by Child’s Gender
Boys Girls Model #1:
Overall 0.062*** 0.029** (0.013) (0.014)
Model #2 (child’s age): Younger than 5 0.038** -0.005 (0.017) (0.018)
Between 5 and 12 0.042** -0.005 (0.017) (0.018)
Older than 12 0.060*** 0.026* (0.013) (0.014)
Model #3 (child’s race/ethnicity): White 0.073*** 0.037** (0.014) (0.014)
Black 0.049*** 0.005 (0.014) (0.015)
Hispanic 0.055*** 0.036* (0.017) (0.018)
Other race/ethnicity 0.071*** 0.036* (0.019) (0.019) Sample Size 41,724 40,256
Logit Regression Results
Table 5 (Table 5 (continuedcontinued): The Marginal Effect of Lowering the Cost of ): The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s GenderAdoption by $100 per Month, by Child’s Gender
Table 5 (Table 5 (continuedcontinued): The Marginal Effect of Lowering the Cost of ): The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s GenderAdoption by $100 per Month, by Child’s Gender
Boys Girls Model #4 (child disability):
Disabled 0.069*** 0.033** (0.014) (0.015)
Not disabled 0.061*** 0.028** (0.013) (0.014)
Model #5 (reason for removal): Child reason for removal 0.095*** 0.045** (0.016) (0.018)
Child not reason for removal 0.058*** 0.028** (0.013) (0.014)
Sample Size 41,724 40,256
Logit Regression Results
Boys Girls Model #6 (foster parent’s marital status):
Married Foster Parents 0.055*** 0.043*** (0.013) (0.014)
Single Foster Parents 0.100*** 0.038** (0.014) (0.015)
Unknown Marital Status 0.003 -0.023 (0.014) (0.015)
Model #7 (foster parent’s age): Foster parent 35 or under 0.060*** 0.035** (0.016) (0.016)
Foster parent 36 – 50 0.073*** 0.040*** (0.013) (0.014)
Foster parent 51 or older 0.064*** 0.015 (0.015) (0.016)
Foster parent age unknown 0.021 -0.004 (0.014) (0.015)
Sample Size 41,724 40,256
Table 5 (Table 5 (continuedcontinued): The Marginal Effect of Lowering the Cost of ): The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s GenderAdoption by $100 per Month, by Child’s Gender
Table 5 (Table 5 (continuedcontinued): The Marginal Effect of Lowering the Cost of ): The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s GenderAdoption by $100 per Month, by Child’s Gender
Logit Regression Results
Boys Girls Model #8 (foster parent’s race/ethnicity):
White 0.064*** 0.030** (0.014) (0.014)
Black 0.079*** 0.034** (0.015) (0.016)
Hispanic 0.099*** 0.112*** (0.022) (0.029)
Other race/ethnicity 0.060*** 0.013 (0.021) (0.022)
Unknown race/ethnicity -0.005 -0.029* (0.015) (0.016)
Model #9 (kinship care): Foster parent related 0.106*** 0.056*** (0.016) (0.017)
Foster parent not related 0.054*** 0.026* (0.013) (0.014)
Sample Size 41,724 40,256
Table notes: Statistically significant at the ***99%, **95%, and *90% confidence levels. Standard errors clustered by state/age group in parenthesis. All regressions include state fixed effects.
Table 5 (Table 5 (continuedcontinued): The Marginal Effect of Lowering the Cost of ): The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s GenderAdoption by $100 per Month, by Child’s Gender
Table 5 (Table 5 (continuedcontinued): The Marginal Effect of Lowering the Cost of ): The Marginal Effect of Lowering the Cost of Adoption by $100 per Month, by Child’s GenderAdoption by $100 per Month, by Child’s Gender
Conclusion
Main FindingsMain FindingsMain FindingsMain Findings
A $100 Reduction in the Cost of Adoption
6.2–percentage point increase for boys.
2.9–percentage point increase for girls.
31% increase.
14% increase.
Conclusion
Main FindingsMain FindingsMain FindingsMain Findings
Black foster children have a low adoption rate because they are more often placed with single foster parents and/or in
kinship care.
Lowering the cost of adoption increases adoption rates of all children.
Lowering the cost of adoption has the largest impact on the children with the lowest adoption rates.
Older children.
Children placed with single foster parents.
Children placed with relatives.
Children with behavioral problems.
Future Work
Future WorkFuture WorkFuture WorkFuture Work
The timing of adoption
Parents rights terminated Adoption.
December adoptions.
Future Work
December AdoptionsDecember AdoptionsDecember AdoptionsDecember Adoptions
5.55 6.037.02 7.76 8.01
9.757.64
9.137.86
8.93 8.79
13.54
1 2 3 4 5 6 7 8 9 10 11 12
Month