Economic Incentives and Foster Child Adoptions Economic Incentives and Foster Child Adoptions Laura...

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%)


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.


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


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


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


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 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


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


53.4

9.23.0

50.7

9.02.9

34.4 33.9

White Black Hispanic Other


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


38.1

4.61.8

4.61.7

21.8

33.7

20.4

36.832.9

White Black Hispanic Other Unknown


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


77.1 78.1

22.9 18.4

Disabled Not Disabled


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


88.0 85.7

12.0 10.8

Child Reason No Child Reason


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


23.728.3

36.0

12.0

22.6

35.327.3

11.3

Under 36 36 - 50 Over 51 Unknown


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


52.8

22.8

49.1

1.81.7

22.023.5 22.8

Pre-Adopt Relative Family Missing


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


33.9

24.4

41.7

23.7

33.639.2

Married Single Unknown


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


22.2

51.1

26.4 25.114.0

30.222.9

46.0

57.4


Girls

25.4

59.5

48.6

19.3

46.2

32.2


Pre-AdoptPre-Adopt RelativeRelative FamilyFamily Married CoupleMarried Couple SingleSingle

Foster Family StructureFoster Family StructureFoster Family StructureFoster Family Structure

Boys

Girls

Basic Patterns


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


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


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)



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)





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)


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.



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

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